Dreams From the Nominees
THE CRISIS in the financial sector has serious implications for the presidential nominees in both the short and long term. Sens. John McCain and Barack Obama face the immediate challenge of commenting, and ultimately voting, on the proposed bailout, and differentiating themselves from each other and from President Bush. Each must also convince voters that he would be better suited to the challenge of overseeing an ailing economy -- all without rattling already jittery markets. In the longer term, the task facing the next president has become suddenly more focused and more difficult. Both candidates' grand promises about new tax cuts or additional spending will probably have to yield to new fiscal realities. The campaign trail is always the place for pie-in-the-sky promises, but those pledges suddenly look dreamier than usual.
How have the candidates weathered the crisis so far, and what do their reactions suggest about how they would govern? Mr. McCain has come off so far as more impulsive than Mr. Obama and more given to showy gestures than serious policymaking. Mr. McCain's call for the head of Securities and Exchange Commission Chairman Christopher Cox was precipitous and unwarranted; this isn't a time to call for scalps but to solve problems. Mr. McCain's insistence that senior officials in the bailed-out firms not be paid more than the $400,000 salary the president makes has an undeniable populist appeal, but its economic rationale is more questionable.
Overall, the two candidates are in sync on such fundamental issues as the need for more oversight than the Treasury plan initially envisioned; the principles each has outlined are largely the same, and both took pains yesterday not to deliver any ultimatums about what would happen if their demands were not met. Yet over the past few weeks, Mr. Obama has seemed the more statesmanlike. Although he is pressing for a second huge stimulus package, for example, he is not conditioning his support for the bailout on that; similarly, he has declined to draw red lines over what the bailout package must contain. Mr. McCain has accused Mr. Obama of being "missing in action" on the financial crisis, but Mr. Obama has seemed appropriately prudent in responding cautiously before issuing pronouncements on complicated deals such as the takeover of the insurance giant AIG.
The grim fact is that even before this crisis, the next president already was destined to face much more trouble paying for his lofty promises than could be acknowledged on the campaign trail. Now, he will have even less wiggle room and will probably have to choose among competing priorities. Which will give way -- plans to expand health-care spending or plans to cut taxes? Plans to spend billions on alternative energy or plans to invest more in education? Mr. Obama acknowledged the problem, telling NBC's Matt Lauer, "Does that mean that I can do everything that I've called for in this campaign right away? Probably not. I think we're going to have to phase it in. And a lot of it's going to depend on what our tax revenues look like." Of course, Mr. Obama hastened to amend his remarks, a few hours later, to insist that he wouldn't delay any middle-class tax cuts. Asked what would give in his plans, Mr. McCain was similarly unwilling yesterday to offer specifics. "We can grow the economy," he said, "by keeping business taxes low." The new sobriety, it seems, will require some time to take hold.