Obama Should Be First of the Two Candidates to Oppose Bailout and Support Loans

            So far, both John McCain and Barack Obama  avoided using the issue that might put whichever of them that DOES IT FIRST WAY AHEAD IN THE RACE FOR the presidency: Obama had better quiickly VOICE HIS OPPOSITIOIN TO TAXPAYER FUNDED BAILOUT OF WALL STREET.  Congress just turned down a bill that the American people DETEST BY 2-TO-1 MARGINS.

              Americans realize that there is, indeed, an alternative to handing over $700 billion to financial institutions as a reward for their failure, and their opposition to the idea will swell even further.

            The bailout ideas proposed by the House Republicans are more in line with the will of the majority of Americans than the Democrats' position of supporting President Bush.

           If Obama stays with the Democrat position he will lose major support among even his own constituency. Speaker Newt Gingrich pointed out that the roles of the parties has been temporarily reversed and it is the Democrats who are out of touch with the American people. It is the Republicans who are demanding that the banks and financial institutions pay for their own bailout, granting them only a mixture of loans and premium-paid insurance, while the Democrats want to pass the hat among the taxpayers to buy their dirty paper.

          In an unusual act of political foresight and skill, the normally dead-headed House Republican leadership crafted a platform that can damage the Democcrats and possibly carry the Republican party to more victories in November.

           All that remains is for the party's candidate, and perhaps even its president and Treasury secretary, to get on board. McCain can recover in his campaign stance on the Wall Street Bailout  the economy issue he lost in Friday's debate.

           He needs to have the courage of his convictions and insist on a bailout without requiring taxpayer-funded purchase of defunct mortgages from failing institutions.

          The difference in the bailout plans is, of course, largely cosmetic. Dead paper is dead paper whether it is on the books of the government, purchased from banks, or on the books of the banks, insured by the government. The game is the same: Loans or grants fund the deficient debt service on the defaulted mortgages until homes can recover their value in the cyclical real estate market.

          But politically it makes all the difference in the world if this task is accomplished by buying bad debt or by lending the bankers the money to cover their current losses while they keep their bad debts on their books and by insuring them against future losses. Loans are politically viable. Purchase of bad debt with tax money is not.

            The Democrats and the President have failed to appreciate the difference between spending and lending in the eyes of the American people. .

             Treasury Secretary Paulson can be excused for not realizing it. Politics is not his thing. But either Barack Obama or John McCain will soon realize the crucial distinction and use their  leverage as a candidate to convince the American people they are out  to stop a taxpayer-funded bailout, insisting instead on loans and insurance.

            If Obama or McCain stands firm, the Democrats will not want to be in the position of passing  the bailout package on their own, without Republican votes, and rely on Bush's signature on the bill to provide a fig leaf of bipartisanship, or they will have to cave in and pass the Republican package.

             Either way, McCain comes out ahead if he is first to declare opposition to the bailout.  If he does, he gets credit for the bailout and Obama will be left out in the cold. . If he doesn't, he can spend the campaign attacking Obama and the Democrats for passing a bill that would spend $700 billion of taxpayer money. If the Democrats don't adopt either course and play a game of chicken with the Republicans, their congressional status as the majority party dooms them to taking the blame for any ensuing collapse.

 Voters can count. They know that Reid and Pelosi are Democrats and that they think they control Congress. With this power comes responsibility. And if the Democrats do nothing - that is, if they fail to use their majorities to pass a bailout against the will of the American people, or to cooperate with the Republicans in adopting the GOP leadership on a new version of the package - it is they who will get the blame for the Wall Street sell off which will follow.

      The Democrats don't dare take that chance. Obama had better act swiftly or else the  cards are dealt for John McCain. All he has to do is have the guts to do what he didn't have the courage to do in the debate: Play the anti-bailout card.