A bad day for the GOP on politics, bailout plan
Washington (AP) — The Bush administration's $700 billion plan to bail out the battered financial services industry has been sidetracked by harsh Republican Party in-fighting and it's uncertain how many GOP lawmakers will even take part in Friday's resumption of closed-door negotiations in Congress.
Even for a party whose president suffers dismal approval ratings, whose legislative wing lost control of Congress and whose presidential nominee trails in the polls, Thursday was a remarkably bad day for Republicans.
A White House summit meeting called principally with the purpose to seal the deal that President Bush has argued is indispensable to stabilizing frenzied markets and reassuring the nervous American public descended into arguments - mostly among Republicans. The meeting revealed that Bush's proposal to combat the worst financial crisis in decades had been suddenly sidetracked by fellow Republicans in the House, who refused to embrace a plan that appeared close to acceptance by the Senate and most House Democrats.
Treasury Secretary Henry Paulson begged Democratic participants not to disclose how badly the meeting had gone, dropping to one knee in a teasing way to make his point according to witnesses.
And when Paulson hastily tried to revive talks in a nighttime meeting near the Senate chamber, the House's top Republican refused to send a negotiator.
"This is the president's own party," said Rep. Barney Frank, a top Democratic negotiator who attended both meetings. "I don't think a president has been repudiated so strongly by the congressional wing of his own party in a long time."
By midnight, it was hard to tell who had suffered a worse evening, Bush or McCain. McCain, eager to shore up his image as a leader who rises above partisanship, was undercut by a fierce political squabble within his own party's ranks.
The consequences could be worse for Bush, and for millions of Americans if the impasse sends financial markets tumbling, as some officials fear. Although talks were resuming Friday, it wasn't clear how many House Republicans would participate.
Republicans and Democrats alike seemed unsure which way McCain was leaning. His campaign's statement late Thursday shed little light.
"At this moment, the plan that has been put forth by the administration does not enjoy the confidence of the American people," it said. It was unclear whether McCain would attend Friday night's scheduled debate against Democratic nominee Barack Obama in Oxford, Miss.
Ordinarily a Republican president's problems are with Democrats, especially if they control the House and Senate. In this case, Bush seemed almost over that hurdle.
To be sure, Democrats demanded a number of changes in his $700 billion bailout plan, but administration insiders signaled they probably were acceptable. They included greater oversight, more protections for taxpayers, efforts to head off home foreclosures and piecemeal allocations of the federal money to buy toxic mortgage securities.
What caught some by surprise, either at the White House meeting or shortly before it, was the sudden momentum behind a dramatically different plan drafted by House conservatives with Minority Leader John Boehner's blessing.
Instead of the government buying the distressed securities, the new plan would have banks, financial firms and other investors that hold such loans pay the Treasury to insure them. Rep. Paul Ryan, R-Wisc., a chief sponsor, said it was clear that Bush's plan "was not going to pass the House."
But Democrats said the same was true of the conservatives' plan. It calls for tax cuts and insurance provisions the majority party will not accept, they said.
At one point in the White House meeting, according to two officials, McCain voiced support for Ryan's criticisms of the administration's proposal. Frank, a gruff Massachusetts liberal, angrily demanded to know what plan McCain favored.
These officials also said that as tempers flared, Bush struggled at times to maintain control.
At one point, several minutes into the session, Obama said it was time to hear from McCain. According to a Republican who was there, "all he said was, 'I support the principles that House Republicans are fighting for."'
Some at the table took that to mean the conservatives' alternative proposal, which stands little chance of passage.
A few hours later, Paulson and the handful of negotiators wearily headed for home. Frank told The Associated Press: "I did tell Secretary Paulson that this whole thing is at risk if the president can't get members of his own party to participate."
Associated Press reporters Julie Hirschfeld Davis and David Espo contributed to this report.
(Copyright 2008 by The Associated Press. All Rights Reserved.)