Financial crisis shakes up presidential campaign
Barack Obama has the edge on economic issues, but volatile markets could change that.
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On Washington’s response to the crisis, there is a lot of blame to go around, and voters are not inclined to cut their leaders any slack, notes Stephen Hess, senior fellow in governance studies at the Brookings Institution.Skip to next paragraph
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A lame duck president with low approval ratings was unable to rally backbenchers of his own party. Divided government complicated matters, with Democratic House Speaker Nancy Pelosi making a pre-vote speech many saw as unnecessarily partisan. A hard-fought presidential election of great significance spilled over into bailout politics, while a national problem of great significance grew worse by the day.
“This was a strange confluence of awfulness,” says Mr. Hess.
Some commentators have gone so far as to bemoan a collapse of American national leadership. Whether that has actually occurred remains to be seen, says Hess, who was a White House staff member in the Nixon and Eisenhower administrations.
Since Franklin Roosevelt, public leadership in the US has “overwhelmingly” become a product of the performance of the chief executive, says Hess. By that, he means both the substance of US public leadership, and the public’s perception of its effectiveness.
In that sense, barring an unforeseen turn for the better, the credit crisis and lingering economic problems may become a make-or-break issue for either McCain or Obama, starting with their first day in the Oval Office.
“They will be handed a problem, and some initial goodwill,” says Hess. “What they do with it is up to them.”
At time of writing, the Senate had not taken its planned Oct. 1 vote on a new bailout plan version.
The Senate’s legislation adds an increase in Federal Deposit Insurance Corp. caps on insured bank accounts from $100,000 to $250,000. It also adds some tax cuts intended to appeal to House Republicans, if the bill passes the Senate and then reaches the House.
Campaigning in Missouri on Oct. 1, McCain said that the new bill isn’t perfect but that it is improved over its old version, and its rejection risked making the credit crisis worse.
“If we fail to act, the gears of our economy will grind to a halt,” said McCain.
McCain, Obama, and Democratic vice presidential nominee Sen. Joe Biden planned to return to Washington and vote for the bailout package.
It would be “catastrophic” if a Washington deal allowing the government to buy distressed financial institution assets is not reached soon, said Obama. “I believe we are unlikely to succeed if we start from scratch or reopen negotiations about the core elements of the agreement,” he said in a statement about the Senate version of the legislation.
Material from the Associated Press was used in this report.