As the events of the past 24 hours have shown, the Republicans lack both the leadership and the unity to bring home any variant on Paulson's proposed bailout deal. This has been a special fiasco for John McCain, and a richly deserved one.
With the Republicans now in thorough disarray, the question now is whether the Democrats have the wit, the nerve, and the unity to do this right. As the politics stand today, a plan may well have to pass Congress mostly with Democratic votes. If the plan works, the Democrats are heroes. If it fails, they are goats. So it had damned better be done right.
But first, let's take a moment to savor the Republicans' self inflicted political wounds. McCain's ploy to cast himself as an above-party leader in the financial crisis, and incidentally to wriggle out of the Friday presidential debate, backfired. The White House meeting was hastily contrived to help McCain, but all it did was help derail the deal.
Far from demonstrating his claim of putting country above politics, the caper was pure opportunism. Contrary to his high-minded claim to be "suspending his campaign," he continued to run the negative ads and his surrogates continued to trash Obama. He wouldn't even say what plan he'd support, and sat largely like a stone at Thursday's White House meeting while Obama joined the discussion and tried to seek common ground. The meeting was supposed to showcase McCain as a leader, but that role went to Obama.
You can just imagine the thinking over at Team McCain. Hey, let's send John to Washington to consummate the bailout deal. He can look really presidential, we'll say we're putting country above politics, and we can even bump Friday's debate to October 2, and kill the Palin-Biden debate as well. High fives all around. Ooops.
And imagine these turkeys negotiating with, say, Putin.
Is there a silver lining in this mess? It sure signals severe disarray both in the McCain camp and in the Republican Party. But what about the future of the economy?
The emerging House Republican plan for a "private sector solution" (backed by more government insurance and tax benefits) is pathetic. It's not really private at all, and it won't solve the problem. But what will solve the problem?
A better plan would have two core elements: First, most of the government money goes to refinance mortgages rather than buy up bad paper. Once the mortgage market stabilizes, some value returns to the bonds backed by mortgages. That way, homeowners are the primary beneficiaries, not the incidental ones. Second, government takes a majority stake in the major failing institutions, takes a good look at their books, and only then pumps in equity capital as necessary. When the crisis passes, government closes the ones that are beyond repair, and sells off the good bits.
Some Democrats are still hoping to salvage some variation of the Paulson. But the Republicans have done them a favor. It's time to give that approach the decent burial it deserves, and start over.
Since the House Republicans have deserted the field, the Democrats might as well step up to the plate and do it right. If it takes another week or two, that's fine. This is not about rescuing the stock market day to day. It's about fashioning a program that will work.
Robert Kuttner, co-editor of The American Prospect and Distinguished Senior Fellow at Demos, has just published Obama's Challenge: America's Economic Crisis and the Power of a Transformative Presidency (Chelsea Green). He is blogging daily about the election and the economic crisis at www.obamaschallenge.com.