As a counterpoint to my doomsaying yesterday, here's James Pethokoukis looking for an upside for John McCain and the GOP:

So does yesterday's rejection of the Paulson plan by House Republicans serve as the electoral knockout blow? Well, maybe among McCain supporters on Wall Street. I've heard from plenty of those folks, professional money managers and such, who are furious that the bailout/rescue plan went down to defeat yesterday and claim to be washing their hands of the GOP, at least for this election cycle. (But maybe longer.) They might not like the title, but Democrats are the party of Wall Street. Longer-term, this could portend a political realignment in which a more populist GOP becomes more focused on policies that directly help families, even if they aren't necessarily considered "pro-growth" by economic conservatives. (Note that Hispanics of both parties voted against the Paulson plan.) In that regard, Sarah Palin and Mike Huckabee might well be the future of the GOP.

But I am not convinced that the bailout bungle plays so badly in the Rest of America, despite the 777-point drop in the Dow Jones industrials. That decline, though painful, was hardly another Black Monday, though we may still get a Black Tuesday, Black Wednesday, Black Thursday, or a Black Friday if it looks like the rescue plan is stuck in suspended animation on Capitol Hill. (Maybe a couple of them.) So far, this still looks like mostly a Wall Street problem to much of America, most of whom have the bulk of their investment in retirement plans that they don't keep a particularly close eye on ... even if people come around to the belief that the Paulson plan is necessary, it will forever be one of the most unloved pieces of legislation in American history--right up there with the establishment of the income tax. Many GOPers see their pushback against it a key element of rebuilding the Republican brand and comeback in 2010.

So what does this all mean for John McCain? A great communicator could present a compelling narrative where corrupt Big Government (symbolized by Fannie and Freddie and its paid enablers in Washington) created the financial crisis and now, amazingly, claims to want to solve the problem through even Bigger Government that could cost American trillions of dollars. In a way, it is the issue John McCain was born to campaign on. I think McCain tried to clunkily begin that process during the debate, but it all came out as sounding like the same old stump speech that he could have given 18 months ago (and probably did). There is still time left, but not much ...

Barring a massive, massive economic collapse that seems to result from Congressional inaction - Tyler Cowen's worst-case scenario, in other words - I imagine that opposition to the bailout will probably be a political winner within the Republican Party over the next couple of election cycles, though anti-bailout sentiment seems more likely to translate into a straightforwardly libertarian populism than into the pro-family conservatism that Pethokoukis mentions, and that I'd obviously like to see. (I think a fusion of the two is possible, but that's topic for another day.) It's harder for me to see the bailout being used as a political weapon by Republicans against the Democrats, though, because it doesn't feel as though the Dems have sufficient ownership over the current bill, and the current mess that's produced it, for the national GOP to profit from any future anti-bailout backlash. Even if it ends up passing with way more support from Dems than from the GOP, I think this is George W. Bush's bailout more than it's Nancy Pelosi's or Barney Frank's, because, well, this is still George W. Bush's economy. Republicans who think the public will blame the Democrats, and specifically a President Obama, if the bailout is massively unpopular come 2010 or 2012 are almost certainly kidding themselves. Whether it succeeds or fails, the bailout seems likely to be remembered as the last great fiasco of the Bush Era, not the first big-government fiasco of a new liberal moment, and there's very little the Republicans can do to change this.

It's true that the landscape might look different if John McCain had come out against the bailout a week ago, tried to tie the whole thing around the neck of Freddie and Fannie Mae and the Democrats, and urged the entire GOP to vote against it. But I don't think there's any way at this point for the McCain campaign to execute the kind of anti-bailout pivot Pethokoukis has in mind, given that just last week McCain basically put all his political capital on the line in an effort to get the thing passed. In a sense, McCain's "I'm going to Washington" gambit last week was his campaign in a nutshell: Instead of taking a big policy gamble and opposing the bailout, he played it safe on substance and gambled on the symbolism and/or gimmickry of suspending his campaign and asking to postpone the debate instead. Since I'm a nervous nellie who basically wants the bailout to go through, this is a rare case where I'm glad he played it safe on substance - but the fact remains that having gambled that he could swoop into Washington and take credit for rescuing the bill, and having apparently lost that bet, he can't just switch sides and try to play the anti-bailout populist from here on out. The McCain campaign can still play the Freddie and Fannie card, up to a point -  and sure enough, they're trying - but the anti-bailout ship has sailed, and there's no way for McCain to get on board.
 

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