Why Would the House GOP Abandon Their President?

For most members of Congress facing tough reelection campaigns, Monday’s bailout vote did not appear to be such a tough decision.

The vast majority of politically vulnerable members from both parties voted against the $700 billion package, fearing serious flak from their constituents back home. Of the 205 members who supported the bill, only seven — four Democrats and three Republicans — are facing highly competitive races.

The vote breakdown is in sync with skeptical public sentiment toward the plan. A recent USA Today/Gallup poll, for instance, showed 56 percent of those surveyed favoring something different than the proposed bailout package. Only 22 percent supported it.

Indeed, it was almost impossible to find a politically vulnerable Republican who supported the deal. The only three Republicans in tough races who supported it were Reps. Christopher Shays of Connecticut, Mark Kirk of Illinois and Jon C. Porter of Nevada.

Most of the politically vulnerable Democrats bucked their party’s leaders and voted against the package as well. While 15 of the 33 Democrats on the Democratic Congressional Campaign Committee’s incumbent-retention Frontline program supported the bailout, the majority aren’t at serious risk of losing their seats.

Indeed, only four Democrats facing highly competitive reelection bids — Reps. Jerry McNerney of California, Tim Mahoney of Florida, Paul E. Kanjorski of Pennsylvania and Jim Marshall of Georgia — voted for the bailout.

Cook Political Report House analyst David Wasserman pointed to those members — and Porter on the Republican side — as having the most to lose from their votes. He said that public sentiment in Shays’ and Kirk’s districts is more supportive of the plan. Shays represents a suburban district with many Wall Street employees, and Kirk represents an affluent suburban Chicago district.

“If this bailout vote remains as unpopular across districts as it is today, the five incumbents with the most explaining to do are Jerry McNerney, Tim Mahoney, Jim Marshall, Paul Kanjorski and Jon Porter,” Wasserman said.

Already one of the most vulnerable House Democrats, Kanjorski could see his vote used against him. His Republican opponent, Lou Barletta, opposes the proposal and has attacked Kanjorski for receiving campaign contributions from Freddie Mac’s and Fannie Mae’s political action committees.

In Florida, Mahoney has been attacked by his Republican challenger, Tom Rooney, for not doing enough to crack down on the two quasi-governmental mortgage giants.

Another striking development was the number of retiring members of both parties who ended up supporting the legislation. By Wasserman’s count, 26 of the 31 members of both parties leaving next year supported it. And 21 House Republicans who aren’t returning next term voted for the bill, making up nearly a third of the 65 GOP votes supporting the legislation.

“The telling statistic on the political side is the votes of those who were retiring versus the votes of those who are in tough races,” Wasserman said. “Retiring members feel strongly that this bill is necessary to stabilize markets, and they know they will not be receiving any political repercussion for voting their conscience.”

House Rejects Bailout

Treasury’s $700 billion Wall Street rescue plan collapsed in the House, sending a shock through financial markets and leaving the Bush Administration scrambling to find some new way to deal with the credit crunch facing the American economy.

The president said he was “disappointed” with the vote and vowed that his administration would “continue to address this economic situation head on.” But House Minority Leader John A. Boehner (R-Ohio) – who pushed hard for passage – warned that there was no obvious “path forward” and said, “We need everyone to calm down.”

Calm was nowhere to be found on Wall Street or on Capitol Hall. The Dow Jones Industrials Average was down more than 600 points at one point, and the House chamber turned into a scene of chaos and confusion after a tumultuous and emotional vote.

"The legislation has failed ,but the crisis is not going away," said Speaker Nancy Pelosi (D-Calif.).

Republican defections proved fatal to the massive government intervention, rejected 228-205. Despite bipartisan appeals from the leadership, anti-Wall Street sentiment and the huge scale of the proposed government intervention proved too much for Treasury to prevail.

Democrats more than delivered a majority of their caucus, and Pelosi held the vote open to bring her numbers up to 140 votes for the package. But Republicans never topped 70, and the final GOP split was 133 against the bill and only 65 for the measure.

There were immediate recriminations on both sides. A switch of just 12 members would have reversed the outcome, and 95 Democrats, many from the left wing of the party, contributed to the defeat.


After the vote, Republicans claimed that the Democratic leadership had been warned that fewer than 60 Republicans would vote for the bill. Democrats denied the claim, saying they never would have brought the bill to the floor if they had been told there was so little Republican support.

“We delivered our votes,” Rep. Rahm Emanuel (D-Ill.) said.

"I guess the Republican leadership is so weak John Boehner couldn't deliver 50 percent of the votes,” sneered Rep. David Obey (D-Wis.) “I thought these were big boys."

Republicans said Pelosi may have lost votes with a floor speech they considered too partisan. "We could have gotten it if it were not for this partisan speech that Speaker Pelosi gave,” Boehner said.

Added Rep. Chris Shays, a Connecticut Republican who also voted for the bill: “Nancy blew it.”

"That is an absurd accusation at a time when our country is in deep economic distress," a Pelosi spokesman fired back."You don't vote on a speech, you vote on a bill."

Financial Services Chairman Barney Frank (D-Mass.), a key negotiator on the bill, mocked the Republicans for blaming Pelosi, saying he would be "uncharacteristically nice" to a dozen Republicans if it meant they would back the package.

"I'm ready to work ... I still feel it's important for the country to come up with some legislation to address the credit crisis," Frank said.

The presidential candidates weighed in, yet offered stark differences in outlooks. John McCain campaign advisor Douglas Holtz-Eakin said the bill failed “because Barack Obama and the Democrats put politics ahead of country." Obama, in a speech in Colorado, took a cooler approach, saying, "There are going to be some bumps and trials and tribulations and ups and down before we get this rescue package done."


McCain, Obama and President Bush had each endorsed the 110-page bill, crafted in marathon talks over the weekend.

Coming just five weeks before the November elections, the House showdown posed a major test of whether the political center could hold in the face of the threats to the larger U.S. economy.

But it was equally true that sober individuals — like Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke — had recommended a course asking nervous lawmakers to absorb serious political risks. And with world financial markets watching, the whole run-up to the vote Monday became a gamble itself, a “no-standing-still, no-turning-back, go-for-broke” political exercise that has now led to a huge defeat.

In the final day, Bernanke — perhaps the clearest voice in expressing the intent of the intervention — was enlisted to make calls to lawmakers, along with President Bush. And after a lengthy meeting of House Republicans on Sunday evening, Treasury had hoped that the party was beginning to come together behind its leadership.

“Colleagues, we’re in this moment, and if we fail to do the right thing, heaven help us,” said Rep. Paul Ryan (R-Wis.), an early critic who had since swung behind the measure.

But fellow Midwesterners, like Rep. Judy Biggert, an Illinois moderate, still rose in opposition. And Shays warned: “For this to pass, a lot of people are going to have to change their minds.”

In the end, they didn’t.

“In my heart and in my mind, I believe that this plan is fraught with unintended consequences, would force generations of taxpayers to pick up the tab for Wall Street losses and could permanently and fundamentally change the role of government in the American free enterprise system,” said Rep. Jeb Hensarling (R-Texas), who led conservatives away from Bush and their own party leaders. “Once the government socializes losses, it will soon socialize profits. If we lose our ability to fail, we will soon lose our ability to succeed. If we bail out risky behavior, we will soon see even riskier behavior."

Speaking from the lawn of the White House, Bush had urged support for the package.


“I know many Americans are worried about the cost of the bill, and I understand their concern,” Bush said. But citing a new report from the Congressional Budget Office Sunday night, the president predicted that “much — if not all” of the $700 billion will be paid back, and he cast the question as a bipartisan step to help the economy.

“Congress can send a strong signal to markets at home and abroad by passing this bill promptly,” the president said. “Every member of Congress and every American should keep in mind: A vote for this bill is a vote to prevent economic damage to you and your community.”

But the Dow was down early Monday in anticipation that the bill could be in trouble, and the news that Wachovia Corp., facing big losses, would be acquired by Citigroup Inc. in a deal facilitated by the Federal Deposit Insurance Corp. added to the tensions.

The massive intervention, like the crisis itself then, required everyone to go into uncharted waters. And in crafting the bill, lawmakers found themselves scared by what they were asked to do, even as they were trying to calm frightened markets.

“There is some tension between the needs of the members and the needs of the markets,” House Financial Services Committee Chairman Barney Frank (D-Mass.) said of his partnership with Paulson “He thinks neurosis on the part of the markets deserves more credibility than neurosis on the part of elected officials and getting a bill passed.”

Martin Kady II, Patrick O’Connor and John Bresnahan contributed to this story.

Still Confused?

By David Leonhardt

Raise your hand if you don't quite understand this whole financial crisis.

It has been going on for seven months now, and many people probably feel as if they should understand it. But they don't, not really. The part about the U.S. housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn't afford, and now they are falling behind on their mortgages.

But the overwhelming majority of homeowners are still doing just fine. So how is it that a mess concentrated in one part of the mortgage business - subprime loans - has frozen the credit markets, sent stock markets gyrating, caused the collapse of Bear Stearns, left the U.S. economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression?

I'm here to urge you not to feel sheepish. This may not be entirely comforting, but any confusion you might have is shared by many people who are in the middle of the crisis.

"We're exposing parts of the capital markets that most of us had never heard of," Ethan Harris, a top Lehman Brothers economist, said last week. Robert Rubin, the former Treasury Secretary and current Citigroup executive, has said that he hadn't heard of "liquidity puts," an obscure financial contract, until they started causing big problems for Citigroup.

I spent a good part of the last few days calling people on Wall Street and in the government to ask one question: "Can you try to explain this to me?" When they finished, I often had a highly sophisticated follow-up question: "Can you try again?"

I emerged from it thinking that all the uncertainty has created a panic that is partly irrational. That said, the crisis isn't close to ending. Ben Bernanke, the Fed chairman, won't be able to wave a magic wand and make everything better, no matter how many more times he cuts rates and cheers Wall Street. As Bernanke himself has suggested, the only thing that will end the crisis is the end of the housing bust.

So let's go back to the beginning of the boom.

It really began in 1998, when large numbers of people decided that real estate, which still hadn't recovered from the early 1990s slump, had become a bargain. At the same time, Wall Street was making it easier for buyers to get loans. It was transforming the mortgage business from a local one, centered around banks, to a global one, in which investors from almost anywhere could pool money to lend. The new competition brought down mortgage fees and spurred innovation, much of which was undeniably good. Why, after all, should someone who knows that they're going to move after just a few years have no choice but to take out a 30-year, fixed-rate mortgage?

As is often the case with innovations, though, there was soon too much of a good thing. Those same global investors, flush with cash from Asia's boom or from rising oil prices, demanded good returns. Wall Street had an answer: subprime mortgages.

Because these loans go to people stretching to afford a house, they come with higher interest rates for the borrowers - even if they're disguised by low initial rates - and thus higher returns for the lenders. These mortgages were then sliced into pieces and bundled into collateralized debt obligations, or CDOs. Once bundled, different types of mortgages could be sold to different groups of investors.

Investors then goosed their returns further through leverage, the oldest strategy around. They made $100 million bets with only $1 million of their own money and $99 million in debt. If the value of the investment rose to just $101 million, the investors would end up doubling their money. Home buyers did the same thing, by putting little money down on new houses, notes Mark Zandi of Moody's Economy.com. The Fed under Alan Greenspan helped make it all possible, sharply reducing interest rates, to prevent a double-dip recession after the technology bust of 2000, and then keeping them low for several years.

All these investments, of course, were highly risky. Higher returns almost always come with greater risk. But people - by "people," I'm referring here to Greenspan, Bernanke, the top executives of almost every Wall Street firm and a majority of American homeowners - decided that the usual rules didn't apply based on the idea that home prices nationwide always rise. And they did rise ever higher, so high, says Robert Barbera of ITG, an investment firm, that they were destined to fall. It was a self-defeating prophecy.

And it largely explains why the mortgage mess has had such ripple effects. The American home seemed like such a sure bet that a huge portion of the global financial system ended up owning a piece of it. Last summer, many policy makers were hoping that the crisis wouldn't spread to traditional banks, like Citibank, because they had sold off the underlying mortgages to investors. But it turned out that many banks had also sold complex insurance policies on the mortgage debt. That left them on the hook when homeowners who had taken out a wishful-thinking mortgage could no longer get out of it by flipping their house for a profit.

Many of these bets were not huge. But they were often so highly leveraged that any losses became magnified. If that same $100 million investment I described above were to lose just $1 million of its value, the investor who put up only $1 million would lose everything. That's why a hedge fund associated with the prestigious Carlyle Group collapsed last week.

"If anything goes awry, these dominos fall very fast," said Charles Morris, a former banker who tells the story of the crisis in a new book, "The Trillion Dollar Meltdown."

This toxic combination - the ubiquity of the bad investments and their potential to mushroom - has shocked Wall Street into a state of deep conservatism. The soundness of any investment firm rests in large part on the confidence of other firms that it has real assets standing behind its bets. So firms are now hoarding cash instead of lending it, until they understand how bad the housing crash will become and how exposed to it they are. Any institution that seems to have a high-risk portfolio, regardless of whether it has enough assets to support the portfolio, faces the double whammy of investors demanding their money back and lenders shutting the door in their face. Goodbye, Bear Stearns.

The conservatism has gone so far that it's affecting many solid, would-be borrowers, which, in turn, is hurting the broader economy and aggravating Wall Street's fears. A recession could cause automobile loans, credit card loans and commercial mortgages to start going bad, as well.

Many economists, on the right and the left, now argue the only solution is for the federal government to step in and buy some of the unwanted debt, as the Fed began doing last weekend. This is called a bailout, and there is no doubt that giving a handout to Wall Street lenders or foolish home buyers - as opposed to, say, laid-off factory workers - is deeply distasteful. At this point, though, the alternative may, in fact, be worse.

Bubbles lead to busts. Busts lead to panics. And panics can lead to long, deep economic downturns, which is why the Fed has been taking unprecedented actions to restore confidence.

"You say, 'My goodness, how could subprime mortgage loans take out the whole global financial system?' " Zandi said. "That's how."

Both Vow to Vote for Bailout

After suggesting they might skip it, both presidential candidates committed Monday to returning to Washington to vote on the controversial mortgage bailout plan that the Senate will consider as soon as Wednesday.

Jill Hazelbaker, the campaign communications director for Sen. John McCain (R-Ariz.), told Fox News: “He’ll be there to vote on the bill.”

“He expects to be able to support this bill, but we need to see what emerges from the Senate,” Hazelbaker said. “We have not heard much from Barack Obama. We still do not know whether or not he intends to come back to Washington.”

But a spokesman for Sen. Barack Obama (D-Ill.) said he, too, will return to Washington for the historic vote.

On Sunday, McCain said on ABC’s “This Week” that congressional negotiators deserve “great credit” for the bipartisan deal. “"It wasn’t because of me,” McCain said. “They did it themselves.”

But Hazelbaker, like senior campaign adviser Steve Schmidt on NBC’s “Meet the Press” on Sunday, said the deal would not have happened “without Sen. McCain.”

“Sen. McCain interrupted his campaign, suspended his campaign activity to come back to Washington to get Republicans around a table,” Hazelbaker said. “Without Sen. McCain, House Republicans would not have appointed a negotiator, which would not have moved this bill forward.

“It’s really Sen. McCain who got all parties around a table to hammer out a deal that hopefully is in the best interests of the American taxpayer.”

Post Debate Polls

Real Clear Politics National Daily Average: Obama +4.6
Colorado: Obama +5.4
Ohio: McCain +1.2
Florida: McCain +1.6
Penn: Obama +4.4


Two days after a presidential debate many commentators scored as a tie, it's beginning to look like the public saw things differently, as several polls show a small but significant post-debate boost for Barack Obama.

A USA Today/Gallup poll released Sunday showed 46 percent of debate-watchers believed Obama outperformed John McCain, while.just 34 percent said McCain got the better of the exchange.

Thirty percent of debate-watchers said they had a more favorable opinion of Obama following the debate, compared with just 14 percent who said their opinion of him had worsened.

Respondents whose opinion of McCain changed as a result of the debate were evenly split, as 21 percent said their view of McCain had improved because of it and 21 percent said it had worsened.

The poll surveyed 701 adults who watched Friday's debate, and all interviews were conducted on Saturday.

Obama's numbers have ticked up nationally since the debate, the first of three scheduled this year, along with next Thursday's vice-presidential face-off.

In the Sunday update to Gallup's daily tracking poll, Obama widened his lead over McCain to 50-42 percent. Friday, in polling that preceded the debate, Obama had a five-point, 49-44 percent advantage.

Gallup's Sunday poll reflected polling from September 25-27, and included just one full day of interviews conducted following the debate in Oxford, Miss. If Obama's improvement does stem from his debate performance, his numbers could rise further over the next few days as the proportion of polling conducted after the debate increases.

Similarly, in the Rasmussen Reports automated tracking poll, Obama opened up a six-point, 50-44 percent, edge over McCain this weekend in both Saturday and Sunday's updates.

These numbers seem to match the results of snap polls taken after the conclusion of the debate, which showed Obama winning over more viewers than McCain.

A CNN poll conducted Friday night by Opinion Research Corp. gave Obama a thirteen-point advantage over his opponent, with 51 percent of viewers saying the Illinois senator won the debate and 57 percent saying he exceeded their expectations. Just 38 percent said McCain's performance was stronger, though 60 percent said he exceeded their expectations.

A Bloomberg/Los Angeles Times poll released Sunday gave Obama a narrower, 49-45 percent edge among debate-watchers, consistent with the lead he held in surveys prior to the debate.

But according to this poll, he scored very high on a question asking which candidate appeared more 'presidential,' besting McCain 46-33 percent.

In a CBS/Knowledge Networks poll conducted just after the debate, Obama led by a similar, fifteen-point margin, with 39 percent of respondents saying he won the debate, compared with only 24 percent who believed McCain came out on top.

And in a focus group conducted during the debate by Democracy Corps, a firm run by Democratic strategists Stan Greenberg and James Carville, Obama made inroads among undecided voters.

Thirty-eight percent of these voters believed Obama won the debate, with 27 percent handing the win to McCain.

And among these focus group participants, two-thirds of whom voted for President George W. Bush in the 2004 election, Obama improved his favorability rating from 40 percent to 69 percent.

While such instant surveys can be unreliable, this weekend's USA/Today Gallup survey and tracking polls fall in line with their results.

In a Sunday appearance on Fox News Channel, South Carolina Sen. Lindsey Graham, one of McCain's most fervent supporters, defended McCain's debate performance but acknowledged Obama's improved standing.

"Sen. Obama helped himself, according to the polls," Graham told anchor Chris Wallace, "Quite frankly, I thought he presented himself well."

Church vs State

Defying a federal law that prohibits U.S. clergy from endorsing political candidates from the pulpit, an evangelical Christian minister told his congregation Sunday that voting for Sen. Barack Obama would be evidence of "severe moral schizophrenia."

The Rev. Ron Johnson Jr. told worshipers that the Democratic presidential nominee's positions on abortion and gay partnerships exist "in direct opposition to God's truth as He has revealed it in the Scriptures." Johnson showed slides contrasting the candidates' views but stopped short of endorsing Obama's Republican opponent, Sen. John McCain.

Johnson and 32 other pastors across the country set out Sunday to break the rules, hoping to generate a legal battle that will prompt federal courts to throw out a 54-year-old ban on political endorsements by tax-exempt houses of worship.

The ministers contend they have a constitutional right to advise their worshipers how to vote. As Johnson put it during a break between sermons, "The point that the IRS says you can't do it, I'm saying you're wrong."

The campaign, organized by the Alliance Defense Fund, a socially conservative legal consortium based in Arizona, has gotten the attention of the Internal Revenue Service. The agency, alerted by opponents, pledged to "monitor the situation and take action as appropriate."

Each campaign season brings allegations that a member of the clergy has crossed a line set out in a 1954 amendment to the tax code that says nonprofit, tax-exempt entities may not "participate in, or intervene in . . . any political campaign on behalf of any candidate for public office."

This time, the church action is concerted. Yet while the ministers say the rules stifle religious expression, their opponents contend that the tax laws are essential to protect the separation of church and state. They say political speech should not be supported by a tax break for the churches or the worshipers who are contributing to a political cause.

In an open letter Saturday, a United Church of Christ minister, the Rev. Eric Williams, warned that many members of the clergy are "exchanging their historic religious authority for a fleeting promise of political power," to the detriment of their churches.

"The role of the church -- of congregation, synagogue, temple and mosque -- and of its religious leaders is to stand apart from government, to prophetically speak truth to power," Williams wrote, "and to encourage a national dialogue that transcends the divisiveness of electoral politics and preserves for every citizen our 'first liberty.' "

In the modern red-brick Living Stones Church in Crown Point, a town of 28,000 residents 50 miles southeast of Chicago, Johnson explained why he thinks a minister should dispense political advice. He then laid out his view of the positions of Obama and McCain on abortion and same-sex marriage, which he called two issues "that transcend all others."

"We want people when you prick them, they bleed the word of God," Johnson said.

Johnson said ministers have a responsibility to guide their flocks in worldly matters, including politics, calling the dichotomy between the secular and the sacred a myth: "The issue is not 'Are we legislating morality?' This issue is 'Whose morality are we legislating?' "

Asked why he felt the need to discuss the candidates by name and to be explicit in rejecting Obama and his pro-choice views, Johnson said he must connect the dots because he is not sure that all members of his congregation can do so on their own.

The congregation greeted Johnson's reasoning and his criticism of Obama with applause.

"When things of the world don't line up with Scripture," said Ed Kraus, 61, who executes reverse mortgages for a living, "he has a right to say they don't."

Ruth Stiener went a step further. "He has a duty," she said. "Heaven forbid that that is ever taken away from our pastors."

Robert Tuttle, law professor at George Washington University, is skeptical that the Alliance Defense Fund project will result in a new judicial interpretation of the 1954 law. "The only way this gets into a court is if the IRS, number one, decides to enforce and the enforcement mechanism they choose actually causes an injury to a church," said Tuttle, who studies the intersection of law and religion. "That's not something that happens often in campaign activity."

More than 180 members of the clergy have signed a pledge from the Interfaith Alliance, a Washington-based group that seeks to separate faith and politics, agreeing not to endorse a candidate on behalf of their house of worship.

"I have no objections to clergy taking off their robes and walking out the door of their church, synagogue or mosque and immersing themselves in political campaigns," said Rabbi Jack Moline of Agudas Achim Congregation in Alexandria, chairman of the Interfaith Alliance board. "But a sanctuary should not be a place of political agitation on behalf of a candidate. On behalf of issues, yes. Of candidates, no."

Moline added: "Endorsing a candidate from the pulpit is saying, 'This is what our God says should be the government of the country.' I think that is a nightmare scenario for a country that introduced the Bill of Rights to humanity."

As for Johnson's criticism of Obama, the Illinois Democrat supports the right to choose abortion. He opposes same-sex marriage but supports civil unions for gay couples.

"Senator Obama is a committed Christian and a man of deep faith," said Joshua DuBois, Obama's national religious affairs director. "And the notion that there is only one way to address issues like abortion, or that people of faith cannot support full civil rights for all Americans, is absurd."

Staff writer Jacqueline L. Salmon in Washington contributed to this report.

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It's Really On!

Sen. John McCain (R-Ariz.) announces: "The McCain campaign is resuming all activities and the Senator will travel to the debate this afternoon. Following the debate, he will return to Washington to ensure that all voices and interests are represented in the final agreement, especially those of taxpayers and homeowners.

The text of a statement from his camapign at about 11:20 a.m. ET:
John McCain’s decision to suspend his campaign was made in the hopes that politics could be set aside to address our economic crisis.

In response, Americans saw a familiar spectacle in Washington. At a moment of crisis that threatened the economic security of American families, Washington played the blame game rather than work together to find a solution that would avert a collapse of financial markets without squandering hundreds of billions of taxpayers’ money to bailout bankers and brokers who bet their fortunes on unsafe lending practices.

Both parties in both houses of Congress and the administration needed to come together to find a solution that would deserve the trust of the American people. And while there were attempts to do that, much of yesterday was spent fighting over who would get the credit for a deal and who would get the blame for failure. There was no deal or offer yesterday that had a majority of support in Congress. There was no deal yesterday that included adequate protections for the taxpayers. It is not enough to cut deals behind closed doors and then try to force it on the rest of Congress -- especially when it amounts to thousands of dollars for every American family.

The difference between Barack Obama and John McCain was apparent during the White House meeting yesterday where Barack Obama’s priority was political posturing in his opening monologue defending the package as it stands. John McCain listened to all sides so he could help focus the debate on finding a bipartisan resolution that is in the interest of taxpayers and homeowners. The Democratic interests stood together in opposition to an agreement that would accommodate additional taxpayer protections.

Senator McCain has spent the morning talking to members of the Administration, members of the Senate, and members of the House. He is optimistic that there has been significant progress toward a bipartisan agreement now that there is a framework for all parties to be represented in negotiations, including Representative Blunt as a designated negotiator for House Republicans. The McCain campaign is resuming all activities and the Senator will travel to the debate this afternoon. Following the debate, he will return to Washington to ensure that all voices and interests are represented in the final agreement, especially those of taxpayers and homeowners.

The President Speaks

THE PRESIDENT: Good evening. This is an extraordinary period for America's economy. Over the past few weeks, many Americans have felt anxiety about their finances and their future. I understand their worry and their frustration. We've seen triple-digit swings in the stock market. Major financial institutions have teetered on the edge of collapse, and some have failed. As uncertainty has grown, many banks have restricted lending. Credit markets have frozen. And families and businesses have found it harder to borrow money.

We're in the midst of a serious financial crisis, and the federal government is responding with decisive action. We've boosted confidence in money market mutual funds, and acted to prevent major investors from intentionally driving down stocks for their own personal gain.

Most importantly, my administration is working with Congress to address the root cause behind much of the instability in our markets. Financial assets related to home mortgages have lost value during the housing decline. And the banks holding these assets have restricted credit. As a result, our entire economy is in danger. So I've proposed that the federal government reduce the risk posed by these troubled assets, and supply urgently-needed money so banks and other financial institutions can avoid collapse and resume lending.

This rescue effort is not aimed at preserving any individual company or industry -- it is aimed at preserving America's overall economy. It will help American consumers and businesses get credit to meet their daily needs and create jobs. And it will help send a signal to markets around the world that America's financial system is back on track.

I know many Americans have questions tonight: How did we reach this point in our economy? How will the solution I've proposed work? And what does this mean for your financial future? These are good questions, and they deserve clear answers.

First, how did our economy reach this point?

Well, most economists agree that the problems we are witnessing today developed over a long period of time. For more than a decade, a massive amount of money flowed into the United States from investors abroad, because our country is an attractive and secure place to do business. This large influx of money to U.S. banks and financial institutions -- along with low interest rates -- made it easier for Americans to get credit. These developments allowed more families to borrow money for cars and homes and college tuition -- some for the first time. They allowed more entrepreneurs to get loans to start new businesses and create jobs.

Unfortunately, there were also some serious negative consequences, particularly in the housing market. Easy credit -- combined with the faulty assumption that home values would continue to rise -- led to excesses and bad decisions. Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on.

Optimism about housing values also led to a boom in home construction. Eventually the number of new houses exceeded the number of people willing to buy them. And with supply exceeding demand, housing prices fell. And this created a problem: Borrowers with adjustable rate mortgages who had been planning to sell or refinance their homes at a higher price were stuck with homes worth less than expected -- along with mortgage payments they could not afford. As a result, many mortgage holders began to default.

These widespread defaults had effects far beyond the housing market. See, in today's mortgage industry, home loans are often packaged together, and converted into financial products called "mortgage-backed securities." These securities were sold to investors around the world. Many investors assumed these securities were trustworthy, and asked few questions about their actual value. Two of the leading purchasers of mortgage-backed securities were Fannie Mae and Freddie Mac. Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.

The decline in the housing market set off a domino effect across our economy. When home values declined, borrowers defaulted on their mortgages, and investors holding mortgage-backed securities began to incur serious losses. Before long, these securities became so unreliable that they were not being bought or sold. Investment banks such as Bear Stearns and Lehman Brothers found themselves saddled with large amounts of assets they could not sell. They ran out of the money needed to meet their immediate obligations. And they faced imminent collapse. Other banks found themselves in severe financial trouble. These banks began holding on to their money, and lending dried up, and the gears of the American financial system began grinding to a halt.

With the situation becoming more precarious by the day, I faced a choice: To step in with dramatic government action, or to stand back and allow the irresponsible actions of some to undermine the financial security of all.

I'm a strong believer in free enterprise. So my natural instinct is to oppose government intervention. I believe companies that make bad decisions should be allowed to go out of business. Under normal circumstances, I would have followed this course. But these are not normal circumstances. The market is not functioning properly. There's been a widespread loss of confidence. And major sectors of America's financial system are at risk of shutting down.

The government's top economic experts warn that without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold:

More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically. And if you own a business or a farm, you would find it harder and more expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs. Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college. And ultimately, our country could experience a long and painful recession.

Fellow citizens: We must not let this happen. I appreciate the work of leaders from both parties in both houses of Congress to address this problem -- and to make improvements to the proposal my administration sent to them. There is a spirit of cooperation between Democrats and Republicans, and between Congress and this administration. In that spirit, I've invited Senators McCain and Obama to join congressional leaders of both parties at the White House tomorrow to help speed our discussions toward a bipartisan bill.

I know that an economic rescue package will present a tough vote for many members of Congress. It is difficult to pass a bill that commits so much of the taxpayers' hard-earned money. I also understand the frustration of responsible Americans who pay their mortgages on time, file their tax returns every April 15th, and are reluctant to pay the cost of excesses on Wall Street. But given the situation we are facing, not passing a bill now would cost these Americans much more later.

Many Americans are asking: How would a rescue plan work?

After much discussion, there is now widespread agreement on the principles such a plan would include. It would remove the risk posed by the troubled assets -- including mortgage-backed securities -- now clogging the financial system. This would free banks to resume the flow of credit to American families and businesses. Any rescue plan should also be designed to ensure that taxpayers are protected. It should welcome the participation of financial institutions large and small. It should make certain that failed executives do not receive a windfall from your tax dollars. It should establish a bipartisan board to oversee the plan's implementation. And it should be enacted as soon as possible.

In close consultation with Treasury Secretary Hank Paulson, Federal Reserve Chairman Ben Bernanke, and SEC Chairman Chris Cox, I announced a plan on Friday. First, the plan is big enough to solve a serious problem. Under our proposal, the federal government would put up to $700 billion taxpayer dollars on the line to purchase troubled assets that are clogging the financial system. In the short term, this will free up banks to resume the flow of credit to American families and businesses. And this will help our economy grow.

Second, as markets have lost confidence in mortgage-backed securities, their prices have dropped sharply. Yet the value of many of these assets will likely be higher than their current price, because the vast majority of Americans will ultimately pay off their mortgages. The government is the one institution with the patience and resources to buy these assets at their current low prices and hold them until markets return to normal. And when that happens, money will flow back to the Treasury as these assets are sold. And we expect that much, if not all, of the tax dollars we invest will be paid back.

A final question is: What does this mean for your economic future?

The primary steps -- purpose of the steps I have outlined tonight is to safeguard the financial security of American workers and families and small businesses. The federal government also continues to enforce laws and regulations protecting your money. The Treasury Department recently offered government insurance for money market mutual funds. And through the FDIC, every savings account, checking account, and certificate of deposit is insured by the federal government for up to $100,000. The FDIC has been in existence for 75 years, and no one has ever lost a penny on an insured deposit -- and this will not change.

Once this crisis is resolved, there will be time to update our financial regulatory structures. Our 21st century global economy remains regulated largely by outdated 20th century laws. Recently, we've seen how one company can grow so large that its failure jeopardizes the entire financial system.

Earlier this year, Secretary Paulson proposed a blueprint that would modernize our financial regulations. For example, the Federal Reserve would be authorized to take a closer look at the operations of companies across the financial spectrum and ensure that their practices do not threaten overall financial stability. There are other good ideas, and members of Congress should consider them. As they do, they must ensure that efforts to regulate Wall Street do not end up hampering our economy's ability to grow.

In the long run, Americans have good reason to be confident in our economic strength. Despite corrections in the marketplace and instances of abuse, democratic capitalism is the best system ever devised. It has unleashed the talents and the productivity, and entrepreneurial spirit of our citizens. It has made this country the best place in the world to invest and do business. And it gives our economy the flexibility and resilience to absorb shocks, adjust, and bounce back.

Our economy is facing a moment of great challenge. But we've overcome tough challenges before -- and we will overcome this one. I know that Americans sometimes get discouraged by the tone in Washington, and the seemingly endless partisan struggles. Yet history has shown that in times of real trial, elected officials rise to the occasion. And together, we will show the world once again what kind of country America is -- a nation that tackles problems head on, where leaders come together to meet great tests, and where people of every background can work hard, develop their talents, and realize their dreams.

Thank you for listening. May God bless you.

The First Could Be Most Important

The following is from the "architect" of the Bush presidency, Karl Rove. Although I disagree with his politics, I have much respect for his political insight.

Presidential debates are important -- and the first debate is the most important of all, establishing an arc of opinion that persists unless jarred loose by big mistakes or dramatic events.

So whether this year's first presidential debate between Sens. Barack Obama and John McCain is Friday night or postponed a few days, it may be the fall's most critical event. In the nine first debates since 1960, the perceived winner of the debate averaged a 4.2 point net swing in the Gallup poll.

Martin KozlowskiMr. Obama fought hard to have the first clash devoted to foreign policy and the last on the economy. It may be smart to end the series on his strongest turf. But that means the debates start on ground where Mr. McCain is more comfortable, having a sizable poll lead on who'd be a better commander in chief.

Here's the advice some experts I consulted offered the candidates:

First, do no harm. Persistent proficiency is better than big mistakes. Remember Al Gore's sighs in 2000? President George H.W. Bush glancing at his watch in 1992? Michael Dukakis's botched answer to Bernie Shaw's death-penalty question in 1988?
Know what you want to achieve and have that narrative down cold, for yourself and for your opponent. How do you want potential defectors and converts to see and feel about you and your opponent when it's over? How do you accentuate your strengths and his weaknesses?

Answer the questions. Voters don't like it when candidates are not responsive. Mr. McCain shone so much brighter at Rev. Rick Warren's Saddleback conversation because he answered with plain talk and simple declarative statements.

People want to see candidates operating without a script. They are clamoring for spontaneity. So avoid hyper-repetition. For example, Mr. Gore's repeated robotic invocation of the phrase "risky scheme" backfired.

Spend time describing problems. In the '92 debates, Bill Clinton and Ross Perot established personal links with voters as much from how they portrayed the nation's challenges as from their proposals to address them.

Humor is a powerful weapon, but only if it is not canned or forced. Ronald Reagan demolished Walter Mondale with this self-deprecating line: "I want you to know that also I will not make age an issue of this campaign. I am not going to exploit, for political purposes, my opponent's youth and inexperience."

The counterpunch is better than the punch. The first person to attack generally suffers, especially if the attack comes across as exaggerated or unfair. Attack sparingly and then by inference and obliquely. Rather than a frontal assault on Mr. Obama's inexperience, Mr. McCain could say America's adversaries will test any new president, and only he has the skill and leadership the country will need in that crisis.

Mr. McCain needs to come across as optimistic, loose and likable. He must guard against revealing his lack of respect for Mr. Obama. And he must grab the "change" banner from Mr. Obama by describing a few things he'll do internationally that are new and different.

Mr. McCain should remind voters the surge in Iraq was the most vital decision in the War on Terror. Mr. Obama opposed it and even continued to oppose it after it was an undeniable success. And Mr. McCain should frame energy as a security issue with large implications for jobs and our economy.

Mr. Obama's task is to look like a credible commander in chief. Right now, too many people lack confidence that he's up to the most important of presidential responsibilities.

Mr. Obama must avoid the pervasive sense of nuance that weakened his performance at the Saddleback Forum. He should attack less. If Mr. McCain is condescending, Mr. Obama should call him on it. If Mr. McCain launches a full-out assault, Mr. Obama should rebut it. Otherwise, he should aim for firmness, seriousness of purpose and clarity in his views.

In criticizing President Bush's foreign policy, Mr. Obama must be careful not to sound like he's running down America. Breaking with someone in his party on a vital issue would show leadership and independence.

The story line of the coverage afterward can do almost as much to shape perception as much as the debate itself. Mr. Gore was on defense for weeks after his '00 sighing fit.

Mr. Obama has more recent debate experience, and he's wise to have spent three days in Florida resting. Mr. McCain, by contrast, has campaigned with little rest and rehearsal. This is dangerous. Mood and countenance matter as much as command of issues.

A debate tie goes to the frontrunner. With that now being Mr. Obama by a slim margin, Mr. McCain must emerge the clear winner, or his prospects of being the next president will dim.

Mr. Rove is a former senior adviser and deputy chief of staff to President George W. Bush.

Aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa

Obama: It's On!

ABC News’ George Stephanopoulos and Rick Klein report: Sen. John McCain on Wednesday said he would “suspend” his presidential campaign to come to Washington to help negotiate a financial bailout bill, a dramatic move designed to seize a powerful issue.

However a senior Obama campaign official said Obama "intends to debate."

"The debate is on," a senior Obama campaign official told ABC News.

McCain said he called on the Commission on Presidential Debates to postpone the debate scheduled for Friday in Mississippi, to ensure quick congressional action. The campaign is also suspending its advertising, pending an agreement with Obama.

“I have spoken to Senator Obama and informed him of my decision and have asked him to join me,” McCain planned to say in New York City, according to advance excerpts released by his campaign. “I am calling on the president to convene a meeting with the leadership from both houses of Congress, including Senator Obama and myself. It is time for both parties to come together to solve this problem.”

Obama supporter and chief debate negotiator Rep. Rahm Emanuel, D-Ill., told MSNBC that "we can handle both," when asked about his reaction to McCain's call to postpone the first debate because of the administration's bailout plan.

He believes they are making good progress on Capitol Hill on the bailout and his initial reaction is that the work on the Hill should not preclude the debate from taking place.

An Obama campaign official told ABC News the Democratic presidential candidate called McCain this morning to suggest a joint statement of principles.

McCain called back this afternoon and suggested returning to Washington.

Obama is willing to return to Washington "if it would be helpful." But reiterated Obama intends to debate on Friday.

McCain and his top advisers said the Republican presidential candidate has not committed to voting for the massive financial bailout plan proposed by the Bush administration, with aides saying he will reserve final judgment until there is a final product.

A senior McCain campaign official said that the “Bush package is dead. This is a serious situation. Package must be resolved by the time markets open on Monday."

Senate Majority Leader Harry Reid said Tuesday that McCain had assured Treasury Secretary Henry Paulson that he would support the $700 billion legislation.

Asked about that Wednesday, McCain responded: “I did not say that.”

Senior advisor Mark Salter then interjected saying, “He hasn’t said that to Paulson or to Reid or to anybody else. He hasn’t said that to me.”

McCain campaign political director Mike DuHaime told reporters at a lunch meeting in Washington that the senator will not commit until he sees the final package that comes to the Senate floor.

“He’s going to do what he thinks is right,” DuHaime said at a lunch sponsored by the Christian Science Monitor. “He’ll make a vote as a leader in this country, and people will look to him.”

DuHaime added, “Quite frankly, I think you could ask Sen. Obama if he’s going to do what he thinks is right. I mean, he has never -- I believe -- never once made a decision that is an unpopular decision or went against the orthodoxy of his party, and was one that was one that was a tough decision to make. . . . Sen. McCain has done that throughout his entire career, his entire life -- not just in politics, but his life.”

DuHaime said that while McCain understands the urgency, many voters continue to have important questions about what the bailout means to them.

“When you start talking about $10,000 per household or per family to go toward bailing out Wall Street, they have legitimate questions about it,” DuHaime said. “People understand that that is a big thing and it affects them, and they do legitimately have questions about, is this really going to go to bail out companies or leaders of companies who now are relying on taxpayer dollars to bail them out, and are going to get these huge compensation packages after they come to the taxpayers for it.”

“There is some frustration, certainly, in that, and it’s understandable to say the least. And it has not been a quick rush to say yes or no. People understand the gravity of this, want to see it done right, while still understanding the timing factor.”


ABC News' Bret Hovell and Sunlen Miller contributed to this report.

Finally

President Bush readied a prime time speech to the nation and Treasury Secretary Henry Paulson accepted a major change in legislation for a $700 billion bailout of the financial industry on Wednesday as the administration scrambled to prevent further deterioration in the economy.
Republican officials said that Paulson had bowed to demands from critics in both parties to limit the pay packages of executives whose companies benefit from the proposed bailout. They spoke on condition of anonymity because Paulson's decision had not been formally announced.

White House officials said Bush's speech would dwell on the financial crisis.

Press secretary Dana Perino said the president wants to tell the American people how the crisis affects them and help them understand the depth of the problem.

The developments came as the administration sought to overcome obstacles in Congress to speedy enactment of an unprecedented government bailout of the beleaguered financial industry.

Federal Reserve Chairman Ben Bernanke told Congress on Tuesday that failure to act quickly could trigger deepening in the credit crisis that would lead to a recession, with rising unemployment and increased home foreclosures.

Appearing before lawmakers for the second day in a row, he added on Wednesday that global financial markets are under "extraordinary stress."

Paulson, who with Bernanke heard withering criticism of the bailout plan on Tuesday, met for the second consecutive day with House Republicans, some of whom have announced their opposition to any federal bailout of the private financial markets that form the backbone of American capitalism.

Other Republicans appear to be more open to legislation, according to congressional and administration officials, although on different terms than the White House proposed last weekend.

Majority Democrats have also criticized the administration's legislation, demanding major changes. At the same time, they have stressed they stand ready to work with the White House to head off an economic catastrophe.

House Speaker Nancy Pelosi met with administration officials to discuss the legislation, and told reporters later, "we're moving in a productive direction." She declined to discuss specifics.

Amid speculation that votes on any legislation could slip into next week, she said, "We'll finish it when it's ready. I'd rather it be sooner rather than later."

Numerous Democrats have said privately in recent days they are wary of voting for the administration's proposed legislation without significant Republican support.

But so far, there was little evidence of support within the GOP rank and file.

"It's a tough sell to most of our members," said Rep. Tom Davis, R-Virginia, after a closed-door meeting with Paulson and Bernanke. "It's a terrible plan, but I haven't heard anything better."

Compounding the administraiton's challenge, Republicans and Democrats both say Bush has lost credibility, particularly in cases where he argues there will be dire consequences if Congress doesn't act.

"They sold the war, they sold the stimulus package and some other things. It's the 'wolf at the door' " argument, Davis said.

The presidential campaign added yet another layer of complexity.

Some Democrats expressed concern that they would side with an unpopular Presidnet Bush, only to have Republican presidential candidate John McCain oppose the measure and try to ride his opposition to victory over Barack Obama.

So far, neither McCain nor Obama has indicated how they would vote on the measure.

Paulson has been negotiating for days with Democrats over the details of the legislation, and while his acceptance of some limitation on so-called "Golden Parachutes" for departing executives removed one obstacle, others remained.

Democrats have called for greater protection for taxpayers, possibly by requiring that the government receive partial ownership—and a share of future profits—of companies that accept help through the proposed bailout.

Additionally, they want to allow bankruptcy judges to rewrite mortgages to ease the burden on consumers who are facing foreclosure.

Another demand, for provisions that give Congress greater authority over the bailout, have already been accepted in principle.

For their part, some Republicans have called for a suspension of the capital gains tax to free money for investment.

Even some of the supporters of the bailout sounded less than enthusiastic.

"It's not my job to just echo people being mad. I'm going to choose the bad choice over the catastrophic choice," said Sen. Lindsey Graham, R-S.C.

Speaking to South Carolina reporters, he added, "We don't have the luxury of kicking this can down the road like we did with immigration or Social Security and dealing with it another day hoping somebody braver than us will come along and have courage that we can't muster to deal with immigration or social security. This is on our watch."

Reflecting the urgency, Bush scrapped plans to fly from New York, where he addressed the Uninted Nations General Assembly earlier in the week, to a political fundraiser in Florida.

Perino said the speech would last only about 14 minutes or so.

McCain Suspends Campaign: Wants to Delay the Debate

MCCAIN: America this week faces an historic crisis in our financial system. We must pass legislation to address this crisis. If we do not, credit will dry up, with devastating consequences for our economy. People will no longer be able to buy homes and their life savings will be at stake. Businesses will not have enough money to pay their employees. If we do not act, ever corner of our country will be impacted. We cannot allow this to happen.

Last Friday, I laid out my proposal and I have since discussed my priorities and concerns with the bill the Administration has put forward. Senator Obama has expressed his priorities and concerns.This morning, I met with a group of economic advisers to talk about the proposal on the table and the steps that we should take going forward.I have also spoken with members of Congress to hear their perspective.

It has become clear that no consensus has developed to support the Administration' proposal. I do not believe that the plan on the table will pass as it currently stands, and we are running out of time.

Tomorrow morning, I will suspend my campaign and return to Washington after speaking at the Clinton Global Initiative. I have spoken to Senator Obama and informed him of my decision and have asked him to join me.

I am calling on the President to convene a meeting with the leadership from both houses of Congress, including Senator Obama and myself. It is time for both parties to come together to solve this problem.

We must meet as Americans, not as Democrats or Republicans, and we must meet until this crisis is resolved.I am directing my campaign to work with the Obama campaign and the commission on presidential debates to delay Friday night's debate until we have taken action to address this crisis.

I am confident that before the markets open on Monday we can achieve consensus on legislation that will stabilize our financial markets, protect taxpayers and homeowners, and earn the confidence of the American people. All we must do to achieve this is temporarily set politics aside, and I am committed to doing so.

Following September 11th, our national leaders came together at a time of crisis. We must show that kind of patriotism now. Americans across our country lament the fact that partisan divisions in Washington have prevented us from addressing our national challenges. Now is our chance to come together to prove that Washington is once again capable of leading this country.

Is this a smart political move?
Shouldn't we want to hear from the candidates as soon as possible about these economic issues in a debate?

Triple Fun!

Five playoffs in six years. Not bad. Not bad at all.

The Red Sox made it official last night, clinching a spot in the playoffs for the fifth time since 2003.

We were getting a little worried. The Sox whittled their magic number to 1 Sunday but failed to clinch Monday in a game that should have been a mortal lock (Josh Beckett vs. Zach Jackson). When the Yankees took a 2-0 lead in Toronto last night while the Sox fell behind the Tribe at Fenway, it started to feel like the interminable wait for Yaz's 3,000th hit. I was afraid Heidi Watney was going to have to wear rain gear into the clubhouse for one more day.

No problem. The Sox rallied for three runs off Cliff Lee in the fifth and Jonathan Papelbon closed out the 5-4 win at 9:55, getting Victor Martinez to pop to Alex Cora. Martinez's shallow fly was remarkably similar to the final out of the 1967 Impossible Dream season when Jim Lonborg got Minnesota's Rich Rollins to pop to Rico Petrocelli.

"We've got a chance to do what we did last year, and that's all we were looking for, an opportunity," Dustin Pedroia told the crowd in a NESN postgame interview aired over the public address system.

A season that started in Tokyo and featured numerous speed bumps (a raft of injuries and the midseason trade of quitter Manny Ramírez) will extend into October. The Sox most likely will open against the Angels next Wednesday or Thursday in Anaheim.

Last night's celebration was considerably tamer than the pandemonium of '67. And it certainly wasn't as wild as last year's American League East clinch bacchanal when Papelbon wound up dancing with a Bud Light 12-pack box on his head. There was no need for mounted police to line the warning track to prevent fans from vaulting the rails.

We should never take the postseason for granted. Sure, there has been expansion of baseball's playoff system. There was a time (as late as 1968) when only one of 10 teams in each league qualified for postseason play. That's two of 20. Today, it's eight of 30 making the playoffs - not quite like the old NHL, which took 16 of 21, but it's considerably easier than it was in the old days.

Still, we could be in a place like Pittsburgh or Kansas City where baseball playoffs are merely a sweet memory, like gasoline for 29 cents a gallon.

Those of us who grew up in the 1950s and '60s remember the hungry years. One of the reasons we immortalize the 1967 Red Sox is because they brought playoff games to Fenway Park for the first time in 19 autumns. That was not the first lengthy Red Sox drought. Way back in the day, the Sox went from 1918 to 1946 without playing a postseason game.

So we are careful not to be too casual about this.

Having said all that, does anybody else find these early-accomplishment celebrations a little overdone?

The Red Sox have baseball's fourth-highest payroll. They had seven players in this year's All-Star Game. Do they really need to cover the lockers with plastic wrap and spray one another with champagne because they have officially qualified as one of the final eight teams in this year's tournament? Is this what administrators do at Harvard when they are named one of America's top 10 colleges by US News & World Report?

"I don't care for it to be scripted," manager Terry Francona said before the game. "If guys want to run around and spray champagne, that's good. If that's how guys feel, that's what they should do. Just because we've had success in prior years, I don't see why this group shouldn't celebrate what they've accomplished.

"We know we have more baseball to play."

As usual, the manager knows what he is talking about. A guy like Jason Bay doesn't know what this is like. Sean Casey and Paul Byrd don't know what it's like to win in Boston. Rookies Jed Lowrie and Justin Masterson should not be denied their first chance to celebrate. After all the Sox went through in 2008, it's no surprise they needed a moment to let loose and exhale.

For the record, there were no commemorative "Wild Card Champion" shirts and caps. No peace-sign foam fingers exclaiming, "We're No. 2!" It's still mathematically possible (though highly unlikely) for the Sox to win the AL East, so they held off on the "Wild Card" garb. It didn't seem to make sense to hand out hats and shirts that say, "We're in!" so the Sox settled for beer and bubbly. Many wore goggles in the clubhouse celebration.

Most fans left shortly after the last out, but the ones who stayed were rewarded when Javier Lopez, David Aardsma, and Manny Delcarmen ran to the bullpen to spray champagne on the cop who guards the relievers for 81 home games. Papelbon soon followed and ran to the warning track to embrace his favorite man in blue.

When Papelbon ran back toward the dugout, the PA blared, "I'm Shipping Up to Boston," but Papelbon did not repeat his Irish step dance from 2007.

Mike Lowell and Aardsma were among the first to come out to douse the fans, and by 10:15, the infield was littered with Red Sox players holding champagne bottles, toasting the fans.

There was additional reason to celebrate. The Sox' clinch party came at the expense of the Yankees - who had been in the playoffs 13 consecutive seasons.

Double fun.

Five postseasons in six years. Pretty good. The second season starts next week.

By the way....the Rangers managed 2nd place! Triple Fun!

Oh Yeah...Then There Is Iran!

Rupert Cornwell: Iran is a bigger threat to the US than the financial crisis

As Americans look the other way, Tehran's bomb moves closer

Live in the US any length of time, and one thing you soon realise: the country, be that its media or its government, can only focus on one crisis at a time. Right now, that failing is eminently forgiveable. Nothing is more pressing than a financial meltdown that unless it is tackled in days – or a very few weeks at the most – could lead to the Great Depression of the 21st century.

But amid the turmoil, another crisis has been forgotten. Once it was measured in years, now the critical moment may arrive in months. Does anyone remember a certain country called Iran, and its suspected plan to build a nuclear weapon?

Lehman Bros and Fannie Mae may have forced Mahmoud Ahmedinejad from the headlines. But Tehran's nuclear programme if anything is accelerating. In a report that was swamped by the drama on Wall Street, the United Nations nuclear watchdog agency, the IAEA, last week effectively threw up its hands in despair.

Teheran continues to refuse to answer questions about its past nuclear activities, the IAEA said, even as it was stepping up its production of enriched uranium. Some experts believe that within 12 months Iran may have amassed enough to build a bomb. And what then?

The impasse looks more intractable and perilous than ever. The truculence of Ahmedinejad only grows, as he revels in this period of deepening American weakness. Action at the UN is stymied by resistance from Russia and China. With relations between Moscow and Washington at their chilliest since the Cold War, there is scant prospect of Security Council agreement on the tougher sanctions that might give Teheran pause – perhaps an arms embargo, and the withdrawal of Russia's promise to supply an advanced air defence system to protect Iran's nuclear sites.

And then there is Israel. The political crisis caused by the resignation of Ehud Olmert, the Prime Minister, will not last for ever. Last summer the country carried out military exercises over the eastern Mediterranean that it let be known were a dry run for a strike on Iran's nuclear installations. Israeli generals and politicians leave no doubt that they regard an Iranian nuclear bomb – even an Iranian capacity to build a nuclear bomb – as an existential threat, which they would act to eliminate on their own if necessary.

An Israeli attack would cause chaos across the Middle East, and send the price of oil into the stratosphere. The Pentagon has signalled it opposes such an operation. In fact, whether the Americans participate or not is irrelevant. Given the US role as Israel's ally of last resort, Iran would assume Washington had tacitly given a green light to an attack, and would act accordingly.
Somehow a way out of this impasse must be found. During the summer there were some encouraging signs: Teheran reduced its involvement in violence in Iraq, and there was talk of the State Department opening a US interests section in the Iranian capital, that would see the first US diplomats based in the city since the 1979 hostage crisis. Nothing since has been heard of the idea – but never would it be more timely than now.

Such is the bleak backdrop against which Barack Obama and John McCain hold their first, and possibly decisive, candidates' debate on Friday. It is supposed to be about foreign policy and national security, but given the only-one-crisis-at-a-time rule, it would be astonishing if the financial mayhem did not intrude – and rightly so, given how domestic financial turmoil will ultimately condition how America behaves in the world.

But Iran ought to be front and centre of proceedings. Almost certainly it will be the first major foreign issue the next President must tackle. John McCain's throwaway line of of "Bomb, Bomb, Bomb –, Bomb Bomb Iran," to the tune of the Beach Boys' "Barbara Ann", uttered during the primaries, was presumably just a joke in bad taste, not a pointer to his intentions in the Oval Office. But every sign is that he would pursue an uncompromising policy.

Like his opponent, Barack Obama insists that Iran must not get the bomb, and has sought to water down his earlier promise that as President he would sit down and talk with the country's enemies, among them Iran.

Plainly though, Obama's instincts lie in that direction. In 2003, flush with the initial success of the Iraq war, the Bush administration rashly rejected an Iranian offer for talks at which everything would be on the table. Today, such an initiative has never been so desperately needed.

Their Lips Say Yes But Their Platform Says No

By JUSTIN ROOD

It turns out, Republicans oppose massive bailouts for private companies.

Who knew?

Just weeks before the Bush administration proposed its massive, $700 billion bailout for U.S. banks, the Republican Party adopted as a plank to its platform a statement declaring just that.

"We do not support government bailouts of private institutions," states the platform, approved Sept. 1. "Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself."

Three nights later, the party nominated Sen. John McCain its presidential candidate. To date, McCain has not publicly opposed the idea of bailing out American financial institutions, although he has said he has concerns about the lack of oversight built into the White House bailout proposal. "We will not solve a problem caused by poor oversight with a plan that has no oversight," he has been quoted as saying.

How will the McCain campaign deal with this issue?

How will the Obama campaign deal with this issue?

Haiku of the Day

I need a bailout
It's seven hundred billion
What will be my part

Obama vs Bubba

What is Barack Obama's biggest remaining obstacle on his road to the White House? A nationally prominent Republican sums it up in a word: "Bubba."

"The Bubba vote is there, and it's very real, and it is everywhere," former House Majority Leader Dick Armey recently said. "There's an awful lot of people in America, bless their heart, who simply are not emotionally prepared to vote for a black man."

Sad, but true. I hate to nickname the problem "Bubba." I used to have a beloved Alabama uncle named Bubba. I loved "Unca Bubba." He taught me how to milk a cow when I was seven years old. I'll be eternally grateful.

"Bubba" began as country slang for "brother." I don't know how it became a label for working-class white folks, but I'm sure my late Unca Bubba would want Dick Army and the rest of y'all to know that there are a lot of black Bubbas, too.

Anyway, as Armey implies, Obama fared worse in the primaries with white working-class males and their wives than he did with other identifiable groups of voters. That has also been typical of his party. Democratic presidential candidates have lost the white male vote in every presidential election since 1964, when President Lyndon B. Johnson, himself a quintessential Bubba in his younger days, beat Sen. Barry Goldwater.

Bill Clinton, another notable bearer of Bubba credentials, came closest in 1992. He was aided by third-party candidate Ross Perot's challenge to President George W. Bush, who, despite his Texas tenure, remains a bit Bubba-challenged.

Yet even Bubba knows something about political correctness these days, so he won't always tell the truth to pollsters. As a result, you will not always hear Bubba speak as candidly as Armey, who now chairs the conservative think tank Freedom Works, spoke to editorial and reporters at USA Today and Gannett News Service, where he made his comments.

Nevertheless, as Armey said, race-based voting is "deplorable, but it is real." That's why, Obama has more reason than McCain to feel nervous about close polls.

In fact, if he fails to show at least a six-point advantage in the polls by Election Day, I expect John McCain to be our next president.

Where do I get that number? I'm no math whiz, but it did not take numerical genius for me to notice that Obama fared best in caucus states, where the voting happens to be conducted in public. Where votes were cast in the privacy of voting booths, Obama tended to do worse than polls predicted. When Obama showed a lead in the polls that fell within the margin of error, it tended to mean a victory for his principal opponent, Sen. Hillary Clinton.

Now new evidence has emerged to back my six-point theory. A new and unusually comprehensive AP-Yahoo poll that takes a look at racial attitudes offers this unsettling news: "Statistical models derived from the poll suggest that Obama's support would be as much as 6 percentage points higher if there were no white racial prejudice."

Of course, that's a rather grand statement, considering how difficult racial prejudice is to identify, let along measure. White people don't have to be racist to vote against Obama, any more than black people have to be a racist to vote for him. There are plenty of other reasons to vote for him or against him.

For example, how do you separate race from apprehensions that he's "maybe a little too sophisticated?" Or the relentless e-mails carrying false rumors that the Christian Obama is really a Muslim -- as if that would be a terrible thing?

Besides, Bubba might well be among the most inclined to see the 90-plus percent black turnout for Obama as justification to vote along racial lines, too, as if white people have had such a tough time as a race in this country.

Yet, one of today's quintessential Bubbas offers encouraging advice for Obama. Former President Bill Clinton, appearing on "The View," gave three good reasons why he thinks Obama will win: 1.) "Two-thirds of Americans are having trouble paying their bills." 2.) America is "growing more diverse," pulling the electorate toward Democrats. And 3.) voter registration is "up for Democrats and flat for Republicans in the 20 most important states."

Indeed, the fundamentals for a Democratic sweep are strong, partly because the fundamentals of the economy are so weak. That's a big reason why McCain's convention bump has faded and Obama has been running even or slightly ahead. But for Obama, if history is our guide, "slightly" isn't going to be good enough.

The Real Impact of the Economic Downturn. VEGAS BABY!

Sue Garrett, in Las Vegas for a birthday party earlier this month, went to what she considers extraordinary lengths to hold down the cost of her trip.

"We decided to sit through one of those blasted timeshare presentations to get a free hotel room," said Garrett, who lives in Los Angeles. She turned down the timeshare but earned herself and her husband a stay on the Las Vegas Strip for her trouble.

Similar stories are heard all over Las Vegas these days, where resorts are discounting and even giving away room nights just to attract enough people to keep their roulette wheels and slot machines spinning.

Vegas barreled through previous U.S. economic recessions with no problem, but the current slowdown -- marked by home foreclosures and then high gasoline prices -- has had a much bigger impact on the gambling mecca than economists expected.

And while free rooms and room discounts have kept hotels relatively full -- occupancy is down just 1 percent in the year to July -- gambling revenue is down 6.5 percent.

"People still have Las Vegas as their destination of choice, but their budget is less," said Jan Jones, senior vice president at Harrah's Entertainment, operator of nearly one-third of the Strip, from Bally's to Caesars Palace.

Harrah's and MGM, which operates 10 properties on the Strip including Bellagio and Circus Circus, have each cut about 1,500 Las Vegas jobs over the past year.

"There is no question that people are spending less money now," said Jim Murren, president and chief operating officer at

MGM.

MGM plans to continue aggressive promotions, such as a $300 return travel voucher for a two-night stay at the MGM Grand. "Our business model is based on a desire to maximize occupancy and traffic at the properties," Murren said.

The majority of Harrah's hotel rooms in Las Vegas, Jones said, are "comped" -- given for free -- to higher-spending members of the company's bonus points system.

Two factors make the current downturn harder for Las Vegas than previous ones, according to analysts.

One is high gasoline prices, which will hit the pockets of the more than half of Las Vegas visitors who drive in by car or bus. No one knows how $4-a-gallon gasoline will affect their spending decisions, said Margaret Holloway, senior credit officer at Moody's Investors Service.

The other is the growth of places where gamblers can get a cheaper fix close to home, like riverboats in the U.S. Midwest and new casinos on Indian reservations like the MGM Grand at the Foxwoods casino in Connecticut.

The U.S. credit crisis has begun to dampen construction, a big economic driver since the 1990s.

Cranes have stalled at Boyd Gaming Corp's $4.8 billion partially built Echelon project as the company awaits financing agreements for two joint venture deals.

And the projection for new luxury hotel rooms to be built by 2010 is down by half from a year ago as the weak economy and credit constraints lead companies to reconsider their plans.

MGM's CityCenter, due to open in late 2009 at a cost of $9.1 billion, along with Echelon, Wynn Resorts Ltd's Encore, Fontainebleau Las Vegas and a new hotel tower at Caesars will probably be the last projects built on the Strip for a decade, MGM's Murren said.

But the 23,000 hotel rooms still in the pipeline loom over an industry that can hardly fill the ones it already has.

Since last October, shares of Las Vegas Sands, owner of the Venetian and the Palazzo, have fallen about 75 percent, while shares of MGM Mirage have lost about two-thirds of their value. Harrah's, the world's biggest gambling company, is owned by Apollo Advisors and TPG Capital.

As the Las Vegas casinos offer discounts to keep their hotels full, the ripples of these policies are felt all over town and even in the plushest of venues.

"We feel what they feel -- when you lower the rate you attract a different clientele," said Nikki Pishotti, marketing manager at the exclusive Canyon Ranch Spa Club, which gets most of its business from people staying at the adjacent Venetian and Palazzo resorts owned by Las Vegas Sands.

Similarly, shopping malls like the Miracle Mile at Planet Hollywood Hotel Las Vegas are forced to follow the casinos' lead by cutting prices. They are thronged, but 50 percent-off signs are common.

"Everybody is a little worried," said Marcia Martinez, who sells moisturizer at a booth in Miracle Mile. "There are a lot of people, but sometimes the restaurants are almost empty."

But like inveterate gamblers, Las Vegas boosters will never stop betting on the city.

The Las Vegas Convention and Visitors Authority, trying to make the best of the downturn, is running an ad campaign under the slogan "Crazy Times Call for Crazy Fun" and is looking to bring in more visitors from overseas.

The growth of Macau, where the Chinese government has been encouraging the construction of Las Vegas-style gambling resorts, will create new gambling customers for Nevada, said Rossi Ralenkotter, president and chief executive of the authority.

Nevertheless, the authority recently delayed renovation plans for the Las Vegas Convention Center -- pushing final completion of the $890 million project to 2011.

"I'm betting that Las Vegas will continue to grow over time," said Keith Schwer, director of business and economic research at the University of Nevada, Las Vegas.

"It's a little bit different than a boat in St. Louis or whatever. Here, it's a destination and the competition is strong. The losers get bought out or blown up."

Matthew Glazier, co-owner of Strip House, a high-end steak house above Planet Hollywood's casino, said that business since it opened a year ago has been around what he expected.

"People know when they come to Vegas they are going to spend a little more than they can afford," he said.

(Reporting by Deena Beasley; Editing by Mary Milliken and Eddie Evans)

Rising Up Against Cheney

There was a time when Dick Cheney could turn back a Republican revolt on Capitol Hill.

That time is gone.

The vice president traveled to Capitol Hill on Tuesday to silence a chorus of GOP complaints about Treasury Secretary Henry Paulson’s $700 billion plan. But House Republicans who walked into a closed-door meeting with Cheney steaming over the plan walked out just as angry, and they described what happened in between as both “a bloodbath” and “an unmitigated disaster.”

Texas Rep. Joe Barton took the unusual step of telling reporters gathered outside the Cannon Caucus Room that he had confronted Cheney “respectfully” about his concerns — a level of dissent Republicans once considered heresy under the Bush administration.

Another lawmaker present — who spoke on the condition of anonymity — said that Cheney, White House chief of staff Joshua Bolten and economic policy adviser Keith Hennessey “were in worse shape when they left than when they came in.”

Cheney’s inability to turn around members of his own party said plenty about how congressional Republicans view the Bush White House these days — but maybe even more about their discomfort with a bailout plan many of them see as an attack on their free market principles.

“It’s a sad fact, but Americans can no longer trust the economic information they are getting from this administration,” South Carolina Sen. Jim DeMint said in a comment posted on Politico’s Arena forum.

“There is tremendous unease over the federal government assuming the assets that these financial institutions cannot price or manage,” said Alabama Rep. Spencer Bachus, the ranking Republican on the committee drafting the legislation.

It wasn’t clear Tuesday whether Republicans were willing to take responsibility for killing the Paulson plan — but neither were they eager to take responsibility for passing it, either.

Republican leaders are now hoping Democrats load the legislation with unrelated measures that would give them the political cover to oppose it, members and aides said. At the same time, party leaders are using back channels in the business community to gauge member support for a “clean” bill.

Former House Speaker Newt Gingrich (R-Ga.) warned his former colleagues that they would pay a price in November for backing the bailout now — and that John McCain could ride to victory over Barack Obama by persuading voters that the bailout is really the “Obama-Bush plan.” While McCain seemed to move in the other direction Tuesday, Gingrich called the Paulson plan “stupid,” “a really bad idea” and “the kind of corrupt scheme that could have been designed by [Russian Prime Minister] Vladimir Putin.”

Despite the anxieties — and outright anger — expressed during the Republicans’ nearly two-hour exchange with Cheney and the other White House officials, lawmakers remained respectful enough to give the vice president two standing ovations.

Still, a lawmaker present said that Cheney and his team “were the wrong guys” to send to the Hill: “The problem is that they’ve used up a lot of goodwill.”

Hennessey and Bolten — who shares a Goldman Sachs pedigree with Paulson — faced a number of tough questions about why the bailout was necessary, how it would actually work and why this particular plan was the best response to the current crisis, according to notes circulated from the meeting.

Cheney and the others made policy arguments for the proposal instead of political arguments that would help lawmakers explain a vote for the plan to constituents. The meeting was almost an hour old when the vice president told the anxious Republicans, in response to a question, that failure to pass this would result in more foreclosures and cause grave hardship for their constituents.

“No one sold it,” one member present said. “Nobody has figured out how to sell it when you’re knocking on voters’ doors.”

Conservatives present also grilled the assembled White House officials about what alternatives the administration considered before coming up with this plan.

Hill Republicans have circulated their own alternatives. Most deal with long-term issues — tax reform, regulatory overhauls or comprehensive energy proposals — that lack the immediate impact Treasury seeks.

But GOP lawmakers are getting more specific. Conservatives on the Republican Study Committee offered an alternative package Tuesday afternoon. Republicans on the House Financial Services Committee, which includes plenty of conservatives, were expected to offer their own alternative package later in the day.

Ironically, Democrats are addressing many of the GOP concerns by adding more government oversight of the program and limiting the pay of top executives whose companies seek an infusion of federal funds. “That’s one thing we’re in total agreement on,” Bachus said of the compensation limits.

GOP leaders are still on the fence publicly. House Minority Leader John A. Boehner (R-Ohio) told his rank-and-file colleagues Tuesday morning that the need to act was very real, imploring them to do something.

But Boehner is caught in a tough spot. He sees the need to act, but his members hate the plan. Other elected leaders could pull the rug out from underneath him by coming out against the administration proposal.

A rumor circulated among his rank and file this week that Boehner and other leaders have already agreed to support the plan in principle, but Boehner’s staff shot down any suggestion that he embraces drafts circulating on Capitol Hill.

The pragmatic Republican assured colleagues that he “hates” the proposal and remains angry that Wall Street brought the economy to this point, members present said. He also promised to vote against the eventual bill if he doesn’t agree with it.

Addressing reporters afterward, Boehner, who invited Cheney to the Hill on Tuesday, reiterated his desire to see Congress pass bailout legislation, even as he acknowledged other Republicans’ concerns.

“It’s the size of the solution that causes great concern and trying to gauge the risk-to-reward ratio,” Boehner told reporters. “How serious is the problem, and how imminent is the crisis? I believe that the risk to our economy is severe and Congress must act.”

So what does this signal for the Republican Party? The Democrats?

McCain Loses His Head

The following is an editorial from Washington Post writer and the face of intellectual conservatism, George Will

"The queen had only one way of settling all difficulties, great or small. 'Off with his head!' she said without even looking around."

-- "Alice's Adventures in Wonderland"

Under the pressure of the financial crisis, one presidential candidate is behaving like a flustered rookie playing in a league too high. It is not Barack Obama.

Channeling his inner Queen of Hearts, John McCain furiously, and apparently without even looking around at facts, said Chris Cox, chairman of the Securities and Exchange Commission, should be decapitated. This childish reflex provoked the Wall Street Journal to editorialize that "McCain untethered" -- disconnected from knowledge and principle -- had made a "false and deeply unfair" attack on Cox that was "unpresidential" and demonstrated that McCain "doesn't understand what's happening on Wall Street any better than Barack Obama does."

To read the Journal's details about the depths of McCain's shallowness on the subject of Cox's chairmanship, see "McCain's Scapegoat" (Sept. 19). Then consider McCain's characteristic accusation that Cox "has betrayed the public's trust."

Perhaps an old antagonism is involved in McCain's fact-free slander. His most conspicuous economic adviser is Douglas Holtz-Eakin, who previously headed the Congressional Budget Office. There he was an impediment to conservatives, including then-Rep. Cox, who, as chairman of the Republican Policy Committee, persistently tried and generally failed to enlist CBO support for "dynamic scoring" that would estimate the economic growth effects of proposed tax cuts.

In any case, McCain's smear -- that Cox "betrayed the public's trust" -- is a harbinger of a McCain presidency. For McCain, politics is always operatic, pitting people who agree with him against those who are "corrupt" or "betray the public's trust," two categories that seem to be exhaustive -- there are no other people. McCain's Manichaean worldview drove him to his signature legislative achievement, the McCain-Feingold law's restrictions on campaigning. Today, his campaign is creatively finding interstices in laws intended to restrict campaign giving and spending. (For details, see The Post of Sept. 17; and the New York Times of Sept. 19.)

By a Gresham's Law of political discourse, McCain's Queen of Hearts intervention in the opaque financial crisis overshadowed a solid conservative complaint from the Republican Study Committee, chaired by Rep. Jeb Hensarling of Texas. In a letter to Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, the RSC decried the improvised torrent of bailouts as a "dangerous and unmistakable precedent for the federal government both to be looked to and indeed relied upon to save private sector companies from the consequences of their poor economic decisions." This letter, listing just $650 billion of the perhaps more than $1 trillion in new federal exposures to risk, was sent while McCain's campaign, characteristically substituting vehemence for coherence, was airing an ad warning that Obama favors "massive government, billions in spending increases."

The political left always aims to expand the permeation of economic life by politics. Today, the efficient means to that end is government control of capital. So, is not McCain's party now conducting the most leftist administration in American history? The New Deal never acted so precipitously on such a scale. Treasury Secretary Paulson, asked about conservative complaints that his rescue program amounts to socialism, said, essentially: This is not socialism, this is necessary. That non sequitur might be politically necessary, but remember that government control of capital is government control of capitalism. Does McCain have qualms about this, or only quarrels?

On "60 Minutes" Sunday evening, McCain, saying "this may sound a little unusual," said that he would like to replace Cox with Andrew Cuomo, the Democratic attorney general of New York who is the son of former governor Mario Cuomo. McCain explained that Cuomo has "respect" and "prestige" and could "lend some bipartisanship." Conservatives have been warned.

Conservatives who insist that electing McCain is crucial usually start, and increasingly end, by saying he would make excellent judicial selections. But the more one sees of his impulsive, intensely personal reactions to people and events, the less confidence one has that he would select judges by calm reflection and clear principles, having neither patience nor aptitude for either.

It is arguable that, because of his inexperience, Obama is not ready for the presidency. It is arguable that McCain, because of his boiling moralism and bottomless reservoir of certitudes, is not suited to the presidency. Unreadiness can be corrected, although perhaps at great cost, by experience. Can a dismaying temperament be fixed?

With issues like this coming from a very well known and respected conservative, will this have any effect on McCain's run for the White House?