Analysis: High-stake politics of U.S. bailout plan

By Yang Qingchuan

WASHINGTON, Sept. 25 (Chinese media) -- The hottest issue

now in the United States is the 700-billion-U.S.-dollar bailout plan proposed by

the Bush administration, which will be the largest financial rescue operation

since the Great Depression.

Under the present political climate, the issue is far

more than an economic decision the country has to make, and high-stake

bipartisan politics are being intensely played out and will determine the

outcome of the bailout debate.

There are two dimensions to the bailout political

game. One is between the President George W. Bush-led Republican administration

and the Democrat-dominated Congress, the other is between John McCain and Barack

Obama as they compete for the country's highest political office.

BUSH SEEKS UPPER

HAND

Obviously, the evolving financial turmoil cannot be a

plus for Bush, whose popularity is still hovering around a historic low of some

30 percent due to the Iraq war and the economic downturn.

But it also offers an opportunity for him to apply

pressure on the Democrats and force them to agree to his terms.

The common reaction to the bailout plan has been

suspicion and the majority of Americans are yet to be convinced by it. Polls

show only some 30 percent of the populace support the plan.

But there is also a prevailing sense of urgency in

which Bush sees an opening.

A CNN survey shows about 80 percent of Americans are

worried that inaction from the government on the financial storm will make

things worse.

It raises the stakes for Democrats, because they do

not want to be seen as onlookers and there is a change of attitude in the

Democratic leadership towards the bailout plan.

Last week, House Speaker Nancy Pelosi said the

financial problems are "their (the Bush administration's) problems" and the

rescue plan "their solution."

But the worsening financial situation made her change

her mind quickly and now she is calling for quick action to solve the problem as

many other Democrats have.

Barney Frank, chairman of the House Financial

Services Committee, pointed out that Democrats cannot duck the issue because the

stakes are too high.

Thomas Mann, a researcher at the Brookings

Institution, said the fear of an economic meltdown will force both parties to

make an outcome but Democrats will leave their footprints on the legislation.

MCCAIN'S NEW

GAMBLE

The trouble on Wall Street has also shaken up the

campaign trail as both presidential candidates John McCain and Barack Obama once

again center their verbal wars on the economy and financial situation.

The situation looks dire for McCain because many

believe that his party's free market and deregulation ideology is one of factors

behind the current troubles.

A CNN survey finds that Americans blame Republicans

for the current financial crisis by a two-to-one margin. It also shows that more

Americans think Obama would better handle the economy by a 10-percent margin.

Obviously, the financial woes have cost McCain's

temporary lead in ratings after the Republican National Convention at the start

of September. Without many good choices left, McCain decided to throw the dice

again at a pivotal moment of his presidential campaign.

He announced Wednesday that he will suspend his

campaign to work on the economy in the Senate and even proposed delaying his

first debate with Barack Obama on Friday.

However, Obama, who is in Florida preparing for the

debate, said the debate should not be postponed, saying Americans need to watch

a debate between him and McCain "now more than ever."

The bold move will surely yield some short-term

benefits for McCain, but there are also long-term downsides for the gamble.

By making a gesture of focusing on the most urgent

issue facing the country, McCain seems to resonate his campaign slogan of

"Country First" and it will make him look like a strong leader.

However, by getting actively involved in the bailout

plan, he also faces a dilemma.

If he helps to work out a bailout plan, he will be

seen as being closely tied to the unpopular president. If not, there will be

more market turmoil, which will make the economy a more dominating campaign

issue, in which McCain has no advantage over Obama.

MORE

OVERSIGHT

One of the intricacies of the political game around

the bailout plan is that McCain and Obama actually have a lot in common on how

to fix financial markets while they keep dumping each other on the issue.

They even issued a joint statement before Bush made

the case for the bailout plan before the nation Wednesday night, saying the plan

is "flawed" and calling for bipartisan cooperation.

As a New York Times article pointed out, after a

string of financial scandals and crises, a quarter century of deregulation and

free-market experiences is giving way to a new round of big-government financial

regulation.

A president Obama or a president McCain will surely

introduce more oversight into the financial sector and other reforms. Whatever

the fate of Bush's bailout plan, that is one certain outcome of the bailout

politics.