by Tim Alberta
Bush would later dismiss the snub, telling friends he wasn’t bothered by it. But watching the convention on television one evening, he turned to Perino. “Do you think they know they’re insulting me?” he asked.
Hurt feelings were an afterthought: For the first time all year, as they departed the Twin Cities, Republicans believed they could hold the White House. The polling suggested as much: After trailing Obama in almost every major national survey since May, McCain was either tied or ahead in eleven of the fourteen polls conducted the week after the convention. The impact on both campaigns, tactically and psychologically, was immediate.
The McCain team had gotten into Obama’s head with its TV ad, “Celebrity,” comparing the Democratic nominee to hotel heiress Paris Hilton, someone famous for being famous, and Spears, the troubled singer. Sensitive to the perception of hero worship, Obama’s campaign scaled back, swapping rock star rallies for intimate town halls. Now, suddenly, it was McCain and Palin drawing the enormous crowds. Axelrod and Obama agreed it was time they revert to the bigger events, concerned that enthusiasm—and momentum—had switched teams.
The Palin bump proved to be a sugar high—stimulating but unsustainable, loaded with flavor but lacking in substance. Her unmasking was brutal: the yawning void of knowledge, the allergy to nuance, the lack of discipline and restraint. These deficiencies burst into view right around the one-month anniversary of her selection, just as Obama guessed, during a now-infamous interview with CBS’s Katie Couric.
Among the other lowlights of the CBS segment, Palin could not name a single newspaper she read. Facebook and Twitter were in their infancies, but video of the interview rocketed around the internet thanks to YouTube, the blogosphere, and Tina Fey’s devastating Saturday Night Live impersonation. It was the beginning of the end for Palin. Her polished facade was dissolving to reveal someone plainly unprepared to be a heartbeat away from the presidency.
“Everyone began to realize this woman is vacuous. She’s got fifteen minutes of pop phrases and slogans, but she’s not a deep thinker,” Rove recalls. “We went from wanting people who were experienced and qualified to wanting people who would throw bombs and blow things up. The ultimate expression of that was Donald Trump, but Sarah Palin was the early warning bell.”
Palin’s ascendance, and the warring intratribal assessments of her, foreshadowed the party’s struggle in foundational ways. To some on the right, her anti-elite, anti-intellectual shtick was hostile to that which makes government effective. “The Palin candidacy is a symptom and expression of a new vulgarization in American politics. It’s no good, not for conservatism and not for the country,” Peggy Noonan wrote in the Wall Street Journal in October.12
To others, however, Palin’s swaggering one-woman insurgency represented the first blow struck against a corrupt league of career politicians who were hopelessly disconnected with America. “We have a polarization in this country not just of conservative-liberal, Democrat-Republican. We also have a polarization in this country of elites versus average people,” Rush Limbaugh said on Fox News that same month. “The elites think they’re the smart people, and they think Sarah Palin’s a hayseed hick. . . . It’s an amazing divide to watch the condescension, the arrogant condescension, for average, ordinary people, the people who make this country work.”
The GOP’s time in power was drawing to a close. But its cultural schism was only just emerging.
THEIR EXPRESSIONS WERE GRAVE, THESE GUARDIANS OF THE FINANCIAL universe, as they settled around the rectangular conference table in the Roosevelt Room. It was Tuesday the sixteenth of September. McCain was still riding a postconvention bounce, and Palin had not yet marginalized herself with self-inflicted wounds. But politics was the last thing on President Bush’s mind.
Evidence had mounted over the past year suggesting an economic powder keg: wildly fluctuating bond markets, panic over bad mortgages, sluggish economic growth, risky bets by big banks. On “Black Monday,” September 15, it exploded: Lehman Brothers and Merrill Lynch, two pillars of American finance, collapsed. Meeting with the president a day later, Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke explained to Bush and his senior staff what had just transpired—and urged immediate federal intervention. They said he could not afford to wait: AIG, the world’s largest insurance company, was also about to go under, threatening a run on the banks and a global economic meltdown.13 Savings accounts would be wiped out; deflationary spirals would crush small businesses; banks would have no credit to extend; home mortgages and car loans would default by the millions.
Bush was sickened if not shocked. Paulson had kept in regular contact since the summertime failure of mortgage subsidizers Fannie Mae and Freddie Mac, and after their federal takeover in early September, Paulson had warned the president that the worst might be yet to come. For his blue-blooded heritage, Bush had never trusted the financial establishment and was known to sometimes question aloud its contribution to an equitable society. But this was not the time for such recriminations. “I don’t give a shit about Wall Street right now,” he told aides during the crisis. “This is about moms and dads getting money from ATMs.”
The bankruptcy of AIG would be calamitous, Paulson and Bernanke told him. A federal rescue of the insurance giant was their only recourse. “You have my blessing,” Bush said.
But it wasn’t enough. Wall Street continued to crumble over the ensuing forty-eight hours, leading the same cast to reassemble in the Roosevelt Room on Thursday the eighteenth of September. This time, Paulson and Bernanke had a steeper ask. They believed a historic infusion of capital was needed to stabilize the financial system, and that it should be appropriated by Congress rather than authorized by government agencies.
This was heresy: Two weeks earlier, the GOP’s convention platform had stated unequivocally, “We do not support government bailouts of private institutions.” But Bush, in the twilight of his presidency, had long since spurned the electoral ramifications of his policymaking. When Senator Mitch McConnell had suggested to him two years earlier that he draw down troops in Iraq as a Democratic wave built in 2006, Bush told him, politely, to take a hike.
The president studied the two men. He knew Paulson’s perspective better than Bernanke’s. “What do you think will happen,” Bush asked the Fed chairman, “if we don’t ask for the money?”
Bernanke did not hesitate. “Mr. President, before I came into government, I was an economic historian. I studied the Great Depression. If we don’t act, we could be facing another Great Depression—this one worldwide.”
Bush grimaced. He told Paulson and Bernanke that he needed an hour. Back in the Oval Office, he called in his senior staff. “I want you to tell me exactly what you just heard him say,” the president said. One by one, they repeated Bernanke: “Another Great Depression.”
Bush nodded. “I’m sure as hell not gonna be that guy.”
That evening, Paulson and Bernanke led a delegation to Capitol Hill to meet with the bicameral leadership of both parties. Once gathered in Speaker Nancy Pelosi’s suite, Paulson wasted no time: The situation was dire and getting worse by the minute, he declared. They had a plan, but for it to succeed they needed prompt bipartisan cooperation. If anyone was tempted to call the treasury secretary’s bluff, all they had to do was steal a glance at the Federal Reserve chairman. “I’ll never forget it as long as I live,” Boehner, the House GOP leader, recalls. “As Paulson was talking, I looked over at Bernanke and his lips were quivering. That’s when I knew we were in big, big trouble.”
Concerns were aired by leaders in both parties. Democrats wanted the root causes of the crisis addressed, Republicans wanted as light a government footprint as possible, and everyone pressed for a specific price tag. “Several hundred billion,” Paulson said, eliciting groans and anxious looks. Still, the meeting was an overall success: Everyone left agreeing that timely action was necessary.
The next morning, Paulson announced the bipartisan consensus
in favor of taking a “comprehensive approach,” and Bush delivered remarks from the Rose Garden.
“Our system of free enterprise rests on the conviction that the federal government should interfere in the marketplace only when necessary,” he said. “Given the precarious state of today’s financial markets, and their vital importance to the daily lives of the American people, government intervention is not only warranted; it is essential.”
The stock market rallied. Washington breathed a sigh of relief.
And then things went south. Paulson’s subsequent unveiling of a $700 billion Troubled Asset Relief Program (TARP, for short) couldn’t have gone over much worse inside the Capitol. The three-page proposal was intentionally scant on details, which the treasury secretary hoped would facilitate speedy passage. Instead, it had the opposite effect: With the narrative fast taking hold of Wall Street getting saved and Main Street getting screwed, constituents flooded their representatives’ phone lines. House members revolted; every congressional office suddenly had prescriptions to fill the void of legislative specifics. The TARP proposal was snowed under. After two days of dead-end negotiations in Congress, Bush decided to use his bully pulpit.
In the middle of the afternoon on Wednesday the twenty-fourth of September, Bush stood in the White House theater practicing a prime-time address he would deliver that evening urging Congress to approve TARP. Josh Bolten, the president’s chief of staff, kept looking down at his phone. McCain’s campaign manager, Rick Davis, was calling repeatedly.
When the rehearsal ended, an aide burst into the theater and announced that Senator McCain was trying to reach the president. Bolten and Bush exchanged glances and retreated to their respective quarters to return the calls, reconvening in the Oval Office a short while later. They had both been told the same thing: McCain was suspending his campaign and returning to Washington to focus on the financial crisis. He wanted a summit with Bush, Obama, and the congressional leadership at the White House.
The president frowned. “We don’t have to say yes to this,” Bush asked Bolten. “Do we?”
THE NEXT AFTERNOON, BOEHNER AND THE HOUSE GOP LEADERSHIP huddled in his suite on the second floor of the Capitol. It had been a miserable seventy-two hours. Uncertainty gripped all of Washington, but nobody felt more heat than Boehner. While the rescue package had critics in both parties and both chambers, the emerging silhouette of a deal was expected to ultimately have sufficient support among Senate Democrats, Senate Republicans, and House Democrats. All bets were off, however, when it came to House Republicans.
Many of them flatly rejected the concept of a bailout, arguing that free markets must be allowed to fail and self-correct. Even those who were open to Paulson’s plan disliked what few specifics they had been given.
The wild card was the party’s presidential nominee. Those Republicans opposed to the bailout hoped that McCain was returning to DC to smash it with a populist hammer, while those Republicans inclined to support it hoped McCain was coming to give them cover.
Suddenly, there he was, the maverick himself, parachuting into Boehner’s suite unannounced and flopping down on the couch. The Republicans around the room exhaled in unison. The big White House summit was hours away, and nobody knew what McCain had up his sleeve.
“So, Boehner,” the Republican nominee said, leaning forward. “What’s the plan?”
Boehner’s face turned a special shade of crimson. “What the hell do you mean, what’s the plan?” he said, coughing cigarette smoke. “You’re running for president. You suspended your campaign. You called the meeting. You tell us!”
McCain’s return to Washington was a politically tactical move, not a legislatively strategic one. He had no plan. Republicans in the room knew it, and soon so would everyone else.
The economy had never been McCain’s area of expertise, nor had he ever mastered the art of projecting empathy to the masses. As the son of a renowned Navy admiral and the husband of a multimillionaire beer heiress, the senator was unfamiliar with financial discomfort. He teased Huckabee during the primary for sounding off on corporate CEOs and global trade deals. He told voters in the Rust Belt, on more than one occasion, that some of their lost jobs were gone for good. He joked that his knowledge of economics boiled down to reading Alan Greenspan’s book. He became flummoxed during an interview when asked how many houses he and his wife owned.14 And just weeks earlier, on the day Lehman Brothers and Merrill Lynch went down, he had responded, “The fundamentals of our economy are strong.”15
This was not what voters wanted to hear, particularly those whose livelihoods depended on an industrial vibrancy that was diminishing before their eyes. According to the Bureau of Labor Statistics, more than two million manufacturing jobs were eliminated between December 2007 and June 2009—15 percent of the entire manufacturing workforce, vanished, in just eighteen months.16
McCain’s staff was unfamiliar with the bailout negotiations, so Boehner tasked one of his lieutenants, Mike Sommers, with accompanying the Republican nominee to the White House meeting. Sommers was supposed to brief McCain en route, but the candidate spent most of the car ride talking by phone with his wife, Cindy, about the first general election debate, scheduled for the following day. When they arrived at 1600 Pennsylvania Avenue, McCain turned to Sommers as they climbed out of their black SUV: “Okay, what do I need to know?”
Things weren’t going much better in the Oval Office. Bush had arranged for some of the top Republicans—Boehner, McConnell, and Vice President Dick Cheney—to game-plan with Paulson prior to the larger gathering. But the powwow blew up when Bush, a close friend and golfing buddy of Boehner’s, kept needling the House GOP leader about his inability to corral Republican votes. “That son of a bitch pissed me off,” Boehner recalls. “I said, ‘Well, if your treasury secretary had any fucking ears, we wouldn’t be in this position!’” Paulson leapt from his chair to protest, and Bush ended the meeting before further damage could be done.
Things were more disciplined on the Democratic side. As the procession moved from Bush’s office to the Cabinet Room, the Republicans noticed that Obama was huddled with Speaker Nancy Pelosi and Senate Democratic leader Harry Reid in a hallway, the three of them plotting in hushed tones. Boehner walked into the room and found his seat next to McCain. “Look,” he whispered, “I think the less you say, the better.”
As everyone found their chairs, Bolten pulled Bush aside. “Mr. President, I never sent you into a meeting of any consequence where I could not tell you what I expected or hoped to have happen,” the chief of staff said. “I just want to apologize in advance.”
By protocol, after his introductory remarks and a quick summary from Paulson, the president turned to his right and recognized Pelosi, the Speaker of the House, to lead off the discussion. “Senator Obama will be speaking for the Democrats,” she replied.
The Republicans gulped hard. Their counterparts had coordinated. Bush turned to Obama, three seats to his left, and gave him the floor. What followed, according to six Republicans in the room, was a flawless diagnosis of the moment—the policy failures responsible, the solutions at hand, the political complexities of passing TARP through a discordant Congress.
Before he finished, Obama made sure to emphasize that a bipartisan agreement had been within reach before McCain called this meeting. That wasn’t entirely true, but it was brilliant gamesmanship: If McCain hoped to be credited with saving the day by putting politics aside, Obama’s counternarrative was that McCain’s actions had actually jeopardized the negotiations at a moment of maximum delicacy.
“Well,” Bush said, turning to McCain, “it’s only fair that I call on you next.”
McCain shook his head. “I’ll wait my turn.”
Republicans in the room were mortified. Boehner, now regretting having told McCain to say as little as possible, jumped in. He explained his members’ qualms and suggested that tweaks would be necessary to deliver a respectable chunk of them. The room began to buzz with side co
nversations, talk of whipping votes and calling hearings and changing legislative text. Amid the chaotic cross talk, Obama finally raised his voice. “I’d like to hear what Senator McCain has to say.”
The table fell silent. Everyone turned toward the GOP nominee. Clearing his throat and sizing up a single index card, McCain delivered a few boilerplate talking points about Republicans’ reasonable concerns with the plan and his hope that a bipartisan consensus would emerge. Reid rolled his eyes, while Obama let escape an audible half laugh, half sigh.
“It was totally embarrassing,” Boehner recalls of McCain’s commentary. “He was unprepared. He had no message. He knew, at that point, he was going to lose.”
As if things couldn’t get uglier, Spencer Bachus, the ranking member on the House Financial Services Committee, seized the moment to boast that Republicans had incorporated strong taxpayer protections into Paulson’s proposal. This infuriated Pelosi, who snapped back that Democrats had insisted on such provisions. Chaos engulfed the room once more, with its screaming matches heard down the hallway.
“Well,” Bush said, pushing his chair away from the table, “I’ve clearly lost control of this meeting.”
THINGS WORSENED IN A HURRY. DESPITE MCCAIN’S TEPID ENDORSEMENT of TARP during the next day’s presidential debate, Republicans led the charge in routing the bill when it came to the House floor the following week. The total was 205 yeas and 228 nays; among Republicans, it was 65 in favor and 133 opposed.