THE COUNTRY is in grave economic peril. Government intervention is necessary to avert a credit market collapse. If ever there were a time for politicians to rise above partisanship and petty squabbling, this would be it. Rubber-stamping the plan proposed by Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Board Chairman Ben S. Bernanke would have been an unwise abdication of congressional responsibility. Instead, however, the opposite could happen, and it would be far more dangerous. The toxic brew of presidential and congressional politics, topped off with a dose of ideological dissension, threatens to derail an agreement that seemed within reach just a few days ago. A breakaway faction better known as the House Republicans is pushing a completely different plan whose merits are dubious and that in any event arrives on the scene far too late. If the house is on fire, starting to build a better fire engine a week after the first alarm is hardly the sensible approach.
Sen. John McCain (R-Ariz.), the Republican presidential nominee, poured gasoline on this volatile mess with his announcement that he was suspending his campaign to deal with the financial crisis. Whatever Mr. McCain's intent, the inevitable effect was to inject presidential campaigning into an already difficult situation. Last night's first presidential debate, with the financial crisis appropriately front and center, was certainly not devoid of political jabs. Sen. Barack Obama (D-Ill.), the Democratic nominee, described the meltdown as "a final verdict on eight years of failed economic policies promoted by George Bush, supported by Senator McCain."
But the candidates toned down their finger-pointing; instead, both sounded hopeful notes about reaching quick agreement. Neither, though, was willing to be candid about the financial implications of the meltdown for his priorities as president. Mr. Obama said some retrenchment was needed but then proceeded to tick off his wish list of spending on energy, health care, education and tax cuts. Mr. McCain pinned his hopes on unspecified spending cuts and the overblown problem of earmarks. Asked by moderator Jim Lehrer how he would lead the country out of financial crisis, Mr. McCain said that "the first thing we have to do is get spending under control in Washington," which would be nice but is not exactly relevant to the immediate problem.
The candidates returned last night to their essential agreement about the necessary elements of a bailout package. Congressional negotiators would do well to keep that in mind as the negotiations proceed this weekend -- and not to succumb to the false notion of a divide between Wall Street and Main Street. The reason to bail out Wall Street is not sympathy for the masters of the universe who have lost their millions but an understanding of the inextricable links between Wall Street and the mainstream economy. In this terrible situation, what's good for Wall Street is good for America -- and that, after all, is the reason to commit the massive sums involved.
Democratic congressional leaders and the Bush administration are close to agreement on a bailout plan with reasonable provisions for accountability and protection of taxpayers' interests, principles on which both Mr. Obama and Mr. McCain agreed last night. Given the grass-roots uproar over the bailout, House Speaker Nancy Pelosi (D-Calif.) understandably wants cover from House Republicans before jumping off this cliff. But if that is not forthcoming, Ms. Pelosi and House Democrats must be willing to take the political heat and pass the package with Democratic votes. Politics must stop at the edge of a financial collapse.