By Thursday evening, the status of the bailout deal was still far from clear, but the latest reports from Washington suggest that John McCain and conservative House Republicans are throwing a spanner into the works.
The Atlantic's Marc Ambinder reports that during the much-ballyhooed meeting with President Bush, McCain had a surprise up his sleeve.
During the White House meeting, it appears that Sen. John McCain had an agenda. He brought up alternative proposals, surprising and angering Democrats. He did not, according to someone briefed on the meeting, provide specifics.
One the proposals -- favored by House Republicans -- would relax regulation and temporarily get rid of certain taxes in order to lure private industry into the market for these distressed assets.
I know of one alternative bailout plan proposed by the Republican Study Group, a group of conservative House representatives. But it's a laughingstock -- a four-point manifesto that calls for suspending the capital gains tax for two years, privatizing Fannie Mae and Freddie Mac, suspending some accounting standards, and stabilizing the dollar. None of these measures would do anything to resolve the underlying factors contributing to the current credit crunch -- which likely explains why, according to Ambinder, Paulson told the attendees at Bush's meeting that the proposals were "unworkable."
If this confusion continues into the morning, I'll bet the market becomes very unhappy. And I will also predict that if the Dow Jones Industrial Average looks like it is going to drop by another 400 or 500 points, the frenzy in Washington to cut a deal will roll over McCain and the Republican Study Group. John McCain appears to be doing exactly what he so honorably told the nation he would not do -- inject partisan politics into a serious economic crisis.
UPDATE: Marc Ambinder changes his story, and says sources tell him that McCain did not push the House Republican conservative bailout proposals.