The bailout standoff continues.

A summary of what's in the major U.S. newspapers.
Sept. 27 2008 8:41 AM

Bombs Over a Bailout

In a doozy of a news day, Sen. John McCain decided to debate after earlier saying he'd stay in Washington to fix the economy, a bailout agreement inched closer to completion, and lawmakers still managed to debate other spending packages as part of their day-to-day business of governing. The papers all lead with the freewheeling, 90-minute showdown, which was supposed to center around foreign policy but which moderator Jim Lehrer allowed to veer extensively into the rapidly evolving financial crisis. In the latter half of the debate, the candidates launched into attacks on each others' foreign-policy positions, with McCain hammering away at Sen. Barack Obama's inexperience and seeking to distinguish his own record from that of President Bush. The Illinois senator repeatedly answered McCain's claims with interjections of "that's not true," attempting to articulate relatively nuanced positions in prime-time TV terms.

Both candidates expressed optimism that Congress would soon settle on a plan to resolve the carnage on Wall Street but clashed over their domestic economic agendas. McCain railed against "out of control" spending in Washington—floating a spending freeze on everything but defense, veterans, and entitlements—while Obama dwelled on his middle-class tax cuts and pinned the current predicament on a trend toward market deregulation, on which Bush and McCain have tended to agree. The foreign-policy discussion lingered on where should be considered the central front in the effort to combat terrorism, with McCain insisting that Iraq still deserved substantial troop commitments while Obama advocated for a shift in focus to Afghanistan.

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The Los Angeles Times finds that neither candidate committed the kind of major gaffe that could have dominated the news cycle for days, nor did they land the kind of knockout blow that would fundamentally alter the terms of the campaign. But most of the papers did highlight the candidates' differences in style. The Wall Street Journal says that McCain adopted a "folksy" delivery—chuckling and smiling much more than his grave-faced opponent—while Obama appeared sharper and quicker on the attack than he had previously. The Washington Post judges that McCain's voice "dripped with derision" as he belittled Obama's approach to meeting with leaders of rogue states, which Obama countered with a chorus of "You were wrong. … You were wrong" about McCain's support for the entry into war with Iraq. The New York Times calls McCain "feisty and aggressive," but with an attachment to terms that those without several decades in the Senate might not understand, betraying a generational gap that defines how the two are understood by a language- and image-sensitive public.

Meanwhile, congressional lawmakers continue to wrangle over the details of a bailout that the brass tacks have begun to puncture. Although Treasury Secretary Henry Paulson's original plan remains largely intact, according to the WSJ, the Post reports that House Democrats led by Rep. Barney Frank, D-Mass., have made some tweaks, including granting taxpayers some equity in banks that participate in the bailout, a plan to release the money in stages rather than all at once, and limits on executive compensation. House Republicans, tired of being pushed around by the majority, looked on Thursday to be closing ranks around a legislative alternative built on federal insurance for mortgage assets combined with tax cuts on investment gains. But the WP fronts a colorful narrative of how McCain's return to Washington threw a wrench into the negotiations: According to the reporters, McCain derailed their emerging agreement by announcing that he wouldn't simply fall into lockstep with the party leadership. "Just like Iraq, I'm not afraid to go it alone if I need to," McCain threatened.

Meanwhile, the NYT reports above the fold that the much-maligned chairman of the Securities and Exchange Commission has admitted defeat, saying that his agency's voluntary oversight program for the banking industry was "fundamentally flawed from the beginning." The flagellation came as the SEC inspector general released a report harshly criticizing the agency's monitoring of Bear Stearns before it went under in March.

Wachovia became the latest bank to start shopping around for buyers as well as its stocks took a nosedive Friday with investors spooking over its large mortgage portfolio. The WSJ says all potential buyers are staying tight-lipped, but the NYT is reporting that the bank has entered preliminary talks with Citigroup, figuring that even a government bailout won't save it from the trash heap.

In parallel developments on the Hill, House Democrats passed a $61 billion social services spending bill that won't make it into law, since Senate Republicans just rejected a companion measure and President Bush has promised to veto it anyway (OK by Democrats, who freely admit the measure was designed to put Republicans on record as opposing social relief programs). Senate Republicans are pushing for a vote on a $631 billion measure for the Pentagon, veterans, homeland security measures, and keeping agencies running at their current levels, which Bush has indicated he will sign on into law. "This is the most expensive week in the history of the Republic," commented Rep. Jeff Flake, R-Ariz.

The papers also found room for several international stories of considerable import. For one thing, modern-day Somali pirates are wreaking havoc with shipping lanes through the Gulf of Aden, boarding ships with large weapons and seizing their cargo. The pirate spokesman, reports the NYT, could not be reached for comment.

Taking action on the issue being debated in Mississippi, NATO has adopted a strategy—or at least the name of a strategy—from Iraq in Afghanistan, undertaking a "surge" of development projects to turn the rising tide of Taliban activity, the Post reports inside.

The LAT brings news that North Korea is apparently in the midst of a construction boom that has analysts baffled: Where is Pyongyang getting all that cash?

Russia has struck an oil deal with Venezuela, including forging a new consortium and a $1 billion military loan for the South American country. The NYT says the move grows out of events in Georgia that have "reordered priorities" in Moscow.

The NYT also has a long exegesis of China's milk problems, looking at how ridden with holes the country's dairy regulatory system really is. The distraction of the Olympics deepened the contamination that has sickened 53,000 children, as did inspectors who gave milk plants clean bills of health, if they were even inspected at all. But, the LAT notes, some have found a way around it: renting cows.

Lydia DePillis is a writer living in New York.

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