What's Up With the Bailout?

Who knows? I've been reading almost every article I've come across and things are still a little fuzzy:

What's going on in Congress? On Monday, there was a tangible fear that a Congress pressured by Bush, Cheney, Treasury Secretary Henry "Hank" Paulson, Fed Chief Ben Bernanke, and SEC Chairman Christopher Cox would hurry up and pass a bill without holding hearings or bothering to think about granting broad new powers to the Treasury Department and expanding next year's deficit to $1 trillion. Newt Gingrich complained that conservative voices were "silent or confused" because this fiscally irresponsible, socialist (We are basically nationalizing the financial industry here.) plan was proposed by Republican leadership.

On Tuesday, Congress woke up. Bernanke, Paulson, and Cox testified before the Senate Banking Committee. Sen. Chuck Schumer (D-NY) asked if $150 billion would be enough for now with a promise of more to come later if needed; Paulson said that would be a "grave mistake." However, compromises were made. Paulson agreed to assistance for homeowners facing foreclosure, limits on compensation for participating firms' executives, and congressional oversight of the program. He balked at the idea that the government should receive stock for helping these companies so the taxpayers could recoup their investment, saying that companies would be less likely to participate if this stipulation was made. (Never mind that that was part of the deal with the savings and loan scandal in the '80s.)

The consensus seems to be that Congress will pass a bill, just one significantly different from Paulson's original proposal.

What's happening on Wall Street?

It seems like nobody knows what's happening. On Friday, the Dow rose nearly 369 points on news that a bailout plan was being suggested. On Monday, it fell 372 points supposedly because investors had a weekend to examine the plan and did not like the lack of details. On Tuesday, it fell an additional 161 points supposedly because investors did not like the details Congress was considering. (Today, it remained relatively stable, losing only 29 points.)

How is it affecting the race for president? Hoo boy. A mere yesterday, both Obama and McCain trod softly, reluctant to make the first move. Neither had given any word about how the expensive deal would affect campaign promises. But it was clear that the bailout was becoming increasingly unpopular; by Monday night, 44% opposed the plan compared to 25% supporting. It was less clear, but the economic mess seemed to help Obama in the polls; a WaPo-ABC poll showed Obama with the first statistically significant lead in the general campaign. (Both campaigns found it hard to believe that Obama could gain 11 points on McCain in one week.)

Yesterday night, Obama said the bailout would likely delay implementing his campaign proposals as president.

And if they were reluctant to make the gambit 27 hours ago, the chess pieces are flying tonight. (Perhaps you'd prefer a poker metaphor?) First, McCain said he'd suspend his campaign tomorrow and fly back to Washington. He also asked that Friday's debate be postponed. The two campaigns agreed to issue a "joint statement outlining their shared principles," which turned out not to say much. But Obama said he'd still want to hold the debate:

With respect to the debates, it's my belief that this is exactly the time when the American people need to hear from the person who in 40 days will be responsible for dealing with this mess. . . . In my mind, actually it's more important than ever that we present ourselves to the American people.

Are these gimmicks? Probably. But the issue could fundamentally alter the presidential race.