A few hours after the stock market took yet another plunge, the presidential candidates met in Nashville, Tenn., for a town-hall-style debate last night, where the economy quickly became the dominant issue. The verdict seems to be that there were no game-changing moments as each of the candidates stuck closely to his stump speech. The Los Angeles Timessays it was "an often testy debate" in which the candidates "made little effort to hide their seemingly mutual contempt," and the Wall Street Journal points out that it "included more sharp edges" than the first encounter. The Washington Posthighlights that it was John McCain, the candidate under the greatest pressure to dominate the debate, who "played the role of the aggressor." Still, while the candidates "exchanged blame" and "clashed repeatedly over taxes and spending," as USA Todaynotes, they largely bypassed the character attacks that have dominated the campaign over the last few days. The New York Timessays the bad economic news and the debate's setting combined to produce "an often stifled encounter."
The NYT goes against the grain and leads with the latest downturn in the markets. Investors kept their fingers firmly on the sell button throughout most of the day, even after the chairman of the Federal Reserve suggested a cut in interest rates is on the way. In normal times, that sort of announcement would have sent stocks soaring, but with the looming threat of a global recession, investors are increasingly skeptical that the government can do anything to improve the situation. "The Fed is just plugging holes in the dam and the water keeps rushing over," an economist tells the paper.
The questions made it clear that undecided voters wanted to hear some new ideas from the candidates on how they'd deal with the financial crisis, but, for the most part, John McCain and Barack Obama had nothing to offer. McCain did try to make some news by using the debate to call for a $300 billion program that would have the Treasury Department buy up bad mortgages and effectively renegotiate them so struggling homeowners can stay in their homes. The LAT calls it one of McCain's "most significant proposals of the campaign" that "would require a radical shift in the government's approach."
The Republican nominee's proposal left many unanswered questions, including how it would be financed, beyond his campaign saying that the money should come out of the bailout plan. The WP also notes that McCain appeared to contradict himself since he "seemed to be proposing two opposing ideas at once: paring back on the budget, through cutting defense programs and earmarks, while at the same time adding an expensive program." Obama's campaign was unimpressed, calling it "old news," noting that the Democratic nominee backed just such a proposal last month and that a similar program is already part of the bailout plan.
Obama continued with his tactic of trying to tie McCain to the Bush administration. For his part, McCain tried to distance himself from the president and even criticized the current administration's approach to a few issues. The Republican nominee sought to portray himself as someone who has a proven record of working across the aisle, and while he didn't mention his running mate once, he did invoke Sen. Joseph Lieberman's name a few times.
In an analysis piece inside, the WSJ points out that even though McCain stayed away from the polarizing character attacks against Obama that he has been raising on the stump, he still attempted to make the debate about his opponent. "Time after time, his answers were as much critiques of Sen. Obama's plans, record and attitudes as explanations of his own proposals," says the WSJ. Still, those hoping that McCain would take Sarah Palin's advice to "take the gloves off" and go on the attack "probably came away disappointed," says the LAT's analysis. The NYT notes that the country's pessimistic mood appeared to have seeped into the debate as "the sort of can-do, feel-good, rah-rah exuberance that candidates sometimes bring to debates was in conspicuously short supply."
In a mark of just how boring the debate really was, everyone says a highlight of the debate came when McCain "disparagingly" ( USAT) referred to Obama as "that one" without saying his opponent's name. "McCain did not, tellingly, look at him," notes the NYT. And while the economy was the No. 1 issue, the WP says that "some of the most pointed exchanges were over foreign policy." It was during mentions of Pakistan and Iraq that McCain was most aggressive in trying to portray his opponent as inexperienced and naive while Obama countered that it was the Republican nominee who muddled facts and was dangerously belligerent in his rhetoric.
The LAT says there was a "telling contrast" in how each candidate addressed the economic downturn and how it would affect citizens. While McCain spent lots of time talking about details in energy policy and even went as far as to call health care "a responsibility," Obama said it was a "right" and repeatedly talked about education and health care, two issues that are usually most appealing to women. Ultimately, if what McCain wanted was to change the course of the campaign, "it was difficult to find evidence that he succeeded." The WP's Dana Milbank says the debate's format ended up hurting McCain because questioners and topics changed so frequently that it "precluded a game-changing moment."
Going back to the financial crisis, Ben Bernanke, the Fed chairman, made it clear yesterday that even though the government will use all of its power to improve the situation, things are likely to get worse before they get better. While many have been predicting the Fed will cut interest rates when policymakers meet at the end of the month, the NYT notes that the central bank may choose to act earlier. The WSJ points out that it's possible the Fed will try to coordinate interest-rate cuts with other central banks.
The Dow Jones industrial average plunged 508 points, or 5.1 percent. The LAT points out that since the beginning of last week, the Dow has dropped nearly 1,700 points, or 15.2 percent. While Bernanke's interest-rate announcement didn't stop the stock market's freefall, the Fed's official announcement that it would begin to lend directly to corporations by buying up short-term debt, otherwise known as commercial paper, for the first time since the Great Depression appeared to have an effect in the credit markets. Still, investors aren't sure this "historic and potentially risky move" (WSJ) will work.
The LAT notes that some investors are worried the government may be taking on more than it can handle. For its part, the WP says that the Fed's latest plan may be just the beginning because yesterday's actions "could even lay the groundwork for future interventions in credit markets, should troubles deepen." Some economists suggest the Fed should expand the program to other types of securities.
In a stark reminder of how the stock market decline affects those who may be far away from Wall Street, USAT and the WP front an analysis by congressional budget analysts that reveals Americans' retirement savings have dropped by about $2 trillion, or about 20 percent, in the past 15 months. The losses are widespread and have even hit traditional pension plans that are usually considered more stable. Meanwhile, a new study by AARP revealed that 20 percent of baby boomers have stopped contributing to their retirement plans. USAT notes that financial planners say this "is exactly the wrong thing to do in this environment" because those who are buying now can snap up stocks at bargain prices.
In a Page One piece, the NYT says that if, as some suspect, the market is in fact close to reaching bottom, investors are likely to see big increases quickly. One investment strategist estimates that recent history has shown stocks recoup "about a third of their bear market losses in the first 40 days after the market hits bottom." For now, anybody "searching for cause-and-effect logic in the daily gyrations of the market will be disappointed" because it all boils down to fear and panic as "the market has become a case study in the psychology of crowds."
Early morning wire stories report that stock markets across Asia fell today, and Japan's Nikkei average plunged 9.4 percent, its steepest drop since the 1987 stock market crash. In addition, as the WSJ previews today, the British government announced a bailout plan for major banks that could pump around $87 billion into some of the country's largest financial institutions.
In other news, the NYT gets word that a military investigation has concluded that more than 30 civilians in a village in Afghanistan were killed by American airstrikes against a suspected Taliban compound on Aug. 22. That figure is far higher than the five to seven civilians the military has long said were killed, but still lower than the 90 civilians that the Afghan government claims died in the airstrikes. The report also supports the military's assertion that the compound was a legitimate target, "a finding that is likely to rekindle tensions with the government of President Hamid Karzai."
The WP's editorial page says that while the presidential candidates "proved more adept at casting blame for the current travails than they were at outlining the best way forward," last night's debate "brought a welcome return to civility." The NYT isn't convinced and says that "[n]inety minutes of forced cordiality did not erase the dismal ugliness of [McCain's] campaign in recent weeks." USAT is by far the most positive about the debate, saying that the "lasting impression was one of two highly qualified candidates engaged in an interesting exchange of ideas about where the nation should be headed." The LAT says that what McCain needs to do to stop his slide in the polls is to "persuade voters that he has a cogent, coherent economic proposal and a command over this dominant issue. He did not deliver either Tuesday night." For its part, the WSJ says McCain didn't "change the dynamics of the race" because he failed to knock Obama "from his cool evasion or even do much to rebut the Democrat's routine talking points." The WSJ says McCain particularly needs to counter Obama's promise to provide more health insurance while claiming that the cost of his plans would be covered by cuts in spending. If McCain lets that "claim go unrebutted, he deserves to lose."