Congress set to salvage economic deal

September 26, 2008 12:00 am

, WASHINGTON, September 26 – US leaders braced for a new day of drama Friday over an enormous financial rescue plan after White House campaign politics intruded into round-the-clock deliberations in Congress.

Republican presidential hopeful John McCain stood accused by angry Democrats of sabotaging a deal so as to salvage his electoral fortunes against his opponent in the November 4 election, Barack Obama.

"John McCain did nothing to help, he only hurt the process," Senate Majority Leader Harry Reid said after White House talks Thursday convened by President George W. Bush with congressional leaders, plus McCain and Obama.

Both of Bush’s would-be successors were meant to meet Friday at a highly anticipated debate, the first of three of this general election — but McCain was calling for a postponement to deal with the crisis on Wall Street.

The 700-billion-dollar package seemed within reach, according to lawmakers from both sides, but then stalled at the White House negotiations and then was engulfed in new rancor at late-night discussions on Capitol Hill.

At an impromptu press conference, Frank brandished a single sheet of paper that he said was the sum of new Republican proposals introduced at the last minute after a week of sleepless nights in Congress.

Reflecting the unease of many Republicans at the government’s unprecedented intrusion into private enterprise, the new plan called for an independent entity to dispose of bad assets, and a cut in capital gains tax.

At Bush’s urging, Congress has been working on a plan to take over mortgage-backed assets so as to give busted Wall Street financiers breathing space after potentially trillions of dollars in risky investments went sour.

New evidence of the sector’s distress came late Thursday as the US government shut down Washington Mutual, allowing JPMorgan Chase to buy the bank’s operations for 1.9 billion dollars.

After urging Congress to act quickly to avert a system-wide disaster in the US economy, Bush had appeared open to Democratic demands to broaden the package to hard-pressed mortgage holders on "Main Street."

Senate banking committee chairman Christopher Dodd earlier Thursday emerged from talks on Capitol Hill with some top Republicans and Democrats to announce "a fundamental agreement on a set of principles."

But hopes for a deal unraveled at the White House, leaving Democrats to accuse McCain of political grandstanding in response to an economy-fueled polls charge by Obama.

The meeting convened by Bush at McCain’s request was a "photo op and political theater that had nothing to do with us getting to work," Dodd fumed.

But McCain insisted Democrats had been premature in talking up prospects for a deal given the high level of Republican discontent at the Paulson plan, especially in the House of Representatives.

Backed by Richard Shelby, the top Republican on Dodd’s Senate committee, McCain told ABC News "there never was a deal" and that more work was needed to get both Republicans and Democrats on side.

Obama again rejected that call, arguing it was more important than ever for the two contenders to lay out their case to anxious US voters.

"One of us is going to be in charge of this mess in four months, and the American people I think have a right and obligation to find out where we want to take the country and what we believe," the Illinois senator said.

McCain said he was "very hopeful" that a deal in Washington could be struck in time for the debate in Oxford, Mississippi to proceed, although Obama was quizzical about why the Republican could not juggle both balls.

Republican Representative Eric Cantor, however, applauded McCain for "coming back, trying to effect the change needed so we can get this bill through."

In the face of the financial tumult, polls had shown Obama opening up a wide lead over McCain, but new surveys Thursday by Gallup and Zogby had the rivals level-pegging again.


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