By Anne E. Kornblut and Michael D. Shear
Washington Post Staff Writers
Wednesday, October 1, 2008
After watching the spectacular defeat of a $700 billion financial rescue plan in the House on Monday, Sen. Barack Obama yesterday accelerated his effort to sell the proposal, seeking to redress what his advisers believe has been a failure by the White House to adequately explain the plan.
Both Obama and his rival for the presidency, Sen. John McCain, called yesterday for the FDIC insurance limit to be raised to protect as much as $250,000 per bank account, a suggestion that was adopted as an emergency measure later in the day. McCain, at an economic roundtable in Des Moines, said that "we cannot allow a crisis in our financial system to become a crisis in confidence."
Both Obama and McCain also called President Bush on Tuesday morning, according to White House aides and the two campaigns. McCain said he urged the president to tap the Treasury Department's $250 billion Exchange Stabilization Fund to help shore up financial institutions, as well as to exercise new authority to buy as much as $1 trillion in mortgages.
"I encouraged him to use this fund as creatively as possible," McCain said of the stabilization fund.
White House spokesman Tony Fratto described both calls as "constructive," saying the nominees were offering to proceed with caution to avoid derailing any progress. "They know they're in delicate discussions, and they don't want to put out proposals that would make it more difficult to get legislation passed," Fratto said.
Obama also sought to put new pressure on some of the 95 Democrats who voted to defeat the bill, calling members whom he might be able to influence. His effort came as McCain continued to call Republican members of the House.
Obama's focus, his senior advisers said, is on using vivid language on the campaign trail to convey how the package would affect voters' lives -- in the hope of increasing public support for it and leading reluctant lawmakers in both parties to switch their votes.
Campaigning in Nevada on Tuesday, Obama rejected the loaded term "bailout" -- a phrase that has been abandoned by the White House because of the connotation that it would help the perpetrators of the meltdown -- and said that if the plan were designed to save "a few big banks on Wall Street, it would be one thing."
"But that's not what it means," Obama said. "What it means is that if we do not act, it will be harder for you to get a mortgage for your home or the loans you need to buy a car or send your children to college. . . . Millions of jobs could be lost. A long and painful recession could follow."
He attempted to reframe the bill from the idea of just handing $700 billion to Wall Street, and he said the plan had been "misunderstood and poorly communicated."
"When it's called a bailout, nobody is in favor of a bailout," Obama said.
McCain, still stung by the defeat of a compromise he had championed, changed the subject slightly on Tuesday to focus on tax policy, hammering Obama with the oft-repeated charge that the Democratic nominee would raise taxes.
McCain also released another ad playing off of the collapse of housing giants Fannie Mae and Freddie Mac and underscoring the call for greater regulation he made two years earlier. The ad includes a surprise guest: former president Bill Clinton, with footage of an interview in which Clinton said Democrats share responsibility for not enacting stiffer oversight in past Congresses.
"I think the responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress or by me when I was president to put some standards and tighten up a little on Fannie Mae and Freddie Mac," Clinton said in the Sept. 25 interview on ABC's "Good Morning America."
At the same time, the Republican National Committee released an ad on McCain's behalf that seemed to suggest that McCain opposes passage of a rescue package. "Wall Street squanders our money, and Washington is forced to bail them out with -- you guessed it -- our money. Can it get any worse?" the ad says.
Asked to reconcile McCain's call for bipartisanship with the tough rhetoric coming from the RNC and the campaign, McCain spokesman Tucker Bounds replied: "Just because we need a rescue plan doesn't mean we're going to allow Barack Obama to run around the country misrepresenting his previous proposals for punitive tax increases on businesses."
McCain and Obama will return to Washington this afternoon so that they can vote on the rescue bill, aides to both men's campaigns said last night. The Senate is expected to take up the bill as early as tonight.
Staff writer Perry Bacon Jr. contributed to this report.