One Big Bailout
For the second day running, everyone focuses on the government takeover of Fannie Mae and Freddie Mac, which is expected to be announced later today. The New York Times pokes through the two mortgage-finance giants' entrails, revealing that the multibillion-dollar bailout was prompted in part by the discovery that Freddie Mac had overstated its capital cushion, presenting itself as more stable than it in fact was. Fannie Mae was in slightly better shape but would have struggled to remain afloat once the government took action against Freddie Mac.
The Washington Post leads local but off-leads with a report noting that Treasury Secretary Henry Paulson has rejected the idea of trying to stabilize Freddie and Fannie with a huge one-off injection of cash and will instead make quarterly investments in a bid to provide security while minimizing the cost to taxpayers. The Los Angeles Timescasts Paulson's strategy as an attempt to find a middle ground between Republican free-marketeers who believe the companies should be allowed to go into receivership and congressional Democrats who believe that government intervention is necessary to save the companies and put the American economy back on an even keel.
Despite the ideological divide, the NYT notes, the rescue package is merely the latest in a succession of recent government bailouts, from the $15 billion set aside for airlines in the aftermath of 9/11 to the Federal Reserve's recent rescue of Bear Stearns. "If anybody thought we had a pure free-market financial system, they should think again," says one analyst. The exact price tag for saving Freddie and Fannie is likely to remain unclear; it's difficult to project, and naming an exact figure could prove politically uncomfortable in the run-up to the presidential election.
John McCain and Barack Obama were broadly supportive of the rescue deal, reports the NYT. Obama said he was withholding final judgment until the Treasury Department released a detailed outline of the plan and called for officials to put the strength of the economy ahead of the demands of lobbyists. McCain's running mate, Sarah Palin, applauded the bailout but said a McCain administration would push for the companies to be made "smaller and smarter."
The NYT looks at the battleground states in the presidential race. Despite early suggestions that the candidates' crossover appeal would bring traditionally blue and red states into play, this year's swing states look remarkably similar to those of 2000 and 2004. Meanwhile, both candidates continued to tout their ability to bring change to Washington. McCain called his ticket "a team of mavericks" and declared: "Change is coming! Change is coming!" Obama responded with an unusually robust attack: "This is coming from a party that's been in charge for eight years," he said. "What they're saying is, 'Watch out, George Bush. Except for economic policies, and tax policies, and energy policies, and healthcare policies, and education policies, and Karl Rove-style politics, except for all that, we're really going to bring change to Washington.' "
All the papers continued to pore over Sarah Palin's CV. The LAT reports that the vice-presidential hopeful's appeal to working-class women may be limited; many say that economic concerns trump the Alaskan governor's "maternal grit." The Post fronts a report on the degree to which Palin has mingled family and politics. Her working-mom persona is a central part of her appeal but thrusts her family's problems into the public eye. The NYT considers Palin's declaration that she would be an advocate for children with special needs. The state of Alaska is currently the subject of two lawsuits alleging inadequate services for special-needs children.
The NYT runs several pieces pondering claims that the media has been unduly tough on Palin. The paper's public editor says that intense scrutiny was inevitable and right given McCain's decision to choose a largely unknown running mate. "The drip-drip-drip of these stories seems like partisanship to Palin's partisans," he writes. "But they fill out the picture of who she is, and they represent a free press doing its job." Mark Leibovich suggests that the GOP is merely rehashing time-worn claims of liberal-media bias: "The bashers and bashees have been through this and know the drill," he says. "It was hard to find a journalist last week who felt any unusual sense of siege or discomfort." Frank Rich is more cynical: "By hurling charges of sexism and elitism at any easily cowed journalist who raises a question about Palin, McCain operatives are hoping to ensure that whatever happened in Alaska with Sarah Palin stays in Alaska," he writes. "They just might pull it off."
The Post gives half its front page to a splashy piece puffing Bob Woodward's new book on the Bush administration's management of the war in Iraq. In today's installment, Woodward looks at the bloody summer of 2006, tracing the conflicting reports that ultimately led Bush to overhaul his administration's strategy for the war.
Pakistani lawmakers have elected Asif Ali Zardari, the widower of Benazir Bhutto, as the country's next president. Zardari, known locally as "Mr. Ten Percent" for allegedly taking millions of dollars in kickbacks during his wife's two terms as prime minister, won by a wide margin; he pledged to usher in a new era of democratic stability and to strengthen Pakistan's national parliament.
India would be allowed to engage in nuclear trade, reports the Post, under a landmark deal approved yesterday by the global body that regulates the sale of nuclear fuel. The NYT notes that the move followed intensive lobbying by the Bush administration but may have a rough passage through Congress amid scheduling problems and concerns that the move could spark an Asian arms race.
Ben Whitford writes for the Guardian, Mother Jones and Newsweek.