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ENPR: Slightly-Tweaked Bailout Poised to Pass

Outlook

  1. Detractors and supporters on Capitol Hill agree a bailout bill will pass Congress and be signed by the President. Right now, it looks like it won’t be very different from the one rejected by the House Monday.
  2. Sen. Barack Obama benefits immensely from the election’s shift back to economic grounds. He is handling the bailout situation craftily while Sen. John McCain continues to stumble and balk.
  3. The conservative, free-market, anti-bailout forces in Washington are demoralized by this week’s demonstration of just how shallow the GOP’s limited-government roots really are. More pragmatic conservatives are livid at the stubbornness of the GOP "ideologues." This is not a conservative-vs.-moderate fault-line, but a leadership-vs.-rank-and-file fault-line.
  4. The Vice Presidential debate between Sen. Joe Biden and Alaska Gov. Sarah Palin this Thursday night is a nerve-wracking event for Republicans, who worry that Palin could confirm the media and Democratic line that she is in over her head. With McCain’s economy-related troubles this week, a Palin debacle could make this race start to look like a blowout.

Presidential

Debate: The first presidential debate finished as a split decision.

  1. Insofar as an objective judgment is possible, McCain outperformed Obama—particularly on foreign policy. But poll data suggest Obama really came out the victor. CNN and ABC polls both showed Obama benefiting from the debate much more than McCain did.
  2. For one thing, Obama was clearer, more direct, and more compassionate-sounding in the economic discussion that occupied the first half hour of the 90-minute debate. This portion of the debate mattered more to voters than the foreign policy portion, where Obama looked unsure of himself and off-key.
  3. McCain, in the public eye, was hurt by his likability deficit. He returned Friday night to his creepy laugh, and he bizarrely refused to make eye contact with Obama. Similar superficialities are what dragged down Al Gore in 2000 and Richard Nixon in 1960.
  4. The divergence of professional and public opinion on the debate could also reflect a difference in expectations. For many voters, this was undoubtedly their first direct impression of either candidate. Obama spoke about giving tax cuts to 95% of families, and did not come across as a scary liberal or foreigner, as some voters may have pegged him. Amazingly, after a year of non-stop, largely fawning coverage of Obama, many voters are just now getting to know him.

Economy

Bailout: Wall Street’s short-lived protest Monday over the House’s rejection of Treasury Secretary Henry Paulson’s bailout combined with polls showing public opposition to the bailout paint a politically poignant picture: Wall Street vs. America.

  1. Telling was the flood of vulnerable Democrats and Republicans voting Nay. Congressmen in close races were willing to risk the blame for inaction more than they were willing get behind a massive bailout. One, Rep. Steve Kagen (D-Wis.), cast his nay vote after his challenger, Jon Gard (R), ran an ad assailing Congress for considering the bailout.
  2. Leaders of both parties looked bad Monday. House Speaker Nancy Pelosi (D-Calif.) lost nearly half of her party, and with her partisan floor speech possibly alienated enough wary Republicans to sink the bailout. Republican leaders, however, looked petty and desperate by blaming Pelosi’s meanness and bizarrely scolding her for not whipping her party more.
  3. Republican leadership supported the bill, while the conservatives opposed it. The divide between party leadership and the rank-and-file shines through here. That most GOP members rejected their party leaders and their President also reflects the lack of powerful leadership. Would Rep. Tom DeLay (Texas) have lost this vote?
  4. Bailout boosters had a few ways to pickup the handful of needed votes. The Congressional Black Caucus could be won over by restoring the affordable-housing fund. Some vulnerable Democrats could be picked up by adding foreclosure-prevention measures. It looks like they are courting conservatives by adding tax-cut extenders.
  5. The House bill was a hastily crafted compromise, and even economists backing the measure admitted it wasn’t a particularly good law. The sentiment was that Congress must do something. This second round of negotiation could yield a more effective bailout, or something looking like frantic patchwork.
  6. The Senate is scheduled to vote tonight on a revised bill, and there is little concern about failure. Democratic leaders sweetened the pot for Republicans by adding tax-cut extenders.
  7. In the confused fallout of a failed bailout that nobody liked, but many insisted we needed, Obama seems to come out ahead, if only because McCain comes out bruised. McCain made an awkward show of suspending his campaign to work on the bill and it failed. Now Obama is publicly sticking his hand into negotiations. If a second bill passes, expect the media to count it as a win for Obama.
  8. McCain continues to look uncomfortable and lost discussing economics, while Obama appears relatively confident. McCain’s difficulty has many roots. First, he doesn’t understand economics, and he has no roots or consistent record in defending the free market.
  9. Second, McCain suffers from a problem that runs to the core of the GOP: the chasm is being exposed between the party’s pro-free market rhetoric and its pro-business record. The GOP has spent nearly three decades touting the wonders of home ownership, the stock market, and finance—now that Wall Street is asking for the sort of big-government protection usually associated with the steel and textile industries, Republicans’ expressed principles have come into conflict with their economic vision.
  10. Obama, meanwhile, continues the government-is-the-solution lines Democrats have employed with relish all month.

House 2008

West of the Mississippi: While there are some competitive races in the Western half of the country, we see few seats switching hands.

  1. Economic turmoil and Capitol Hill finger-pointing could cause a rash of anti-incumbent fever.
  2. Last week, in analyzing House races East of the Mississippi, we forecast a Democratic gain of 5 seats. Those gains thin out further West, yielding a forecast net gain of 7 seats for the Democrats, though the Democrats have stronger opportunities to pad their numbers than Republicans do.
  3. Democratic pickups in New Mexico, Arizona, and Alaska are partially offset by a GOP recapture in Texas. Democrats +2.

Great Plains: (Montana, North Dakota, South Dakota, Nebraska, Iowa, Kansas, Missouri)

While Obama won all of the caucuses and primaries in this part of flyover country, sparking media speculation that his party could surge here, Democrats have no serious chances to pick-up seats in any of these states.

The most competitive race in this region is the reelection effort of Rep. Nancy Boyda (D-Kan.), whose upset of Jim Ryun (R) in 2006 was one of last cycle’s most shocking results. Ryun lost his primary bid last month, and so the Republican standard-bearer is State Treasurer Lynn Jenkins (R). Jenkins has a strong shot, but right now, she is the underdog.

In Iowa, freshmen Democrats Bruce Braley (D) and Dave Loebsack (D) appear to have avoided serious challenges.

In Missouri, Rep. Sam Graves (R) is a top target of Democrats, who have nominated former Kansas City Mayor Kay Barnes (Mo.). Republicans also have to defend the seat left open by the gubernatorial candidacy of Rep. Kenny Hulshof (R). While Hulshof’s seat should be pretty safe, Graves is in danger. No Change.

Southwest: (Texas, Oklahoma, New Mexico, Arizona)

New Mexico has only three seats in Congress, and all three are open this year, thanks to the scramble for the open U.S. Senate seat. Democrats will safely hold onto the liberal 3rd District covering the northern half of the state, but the two GOP-held seats—the Albuquerque-based 1st District and the southern 2nd District—are seriously in play. While demographics would favor Dems in the 1st and the GOP in the 2nd, candidate recruitment suggests exactly the opposite. Indeed, Albuquerque looks likely to stay in GOP hands, while Democrats should pick up the seat of Rep. Steve Pearce (R).

Texas offers the GOP its strongest pickup opportunity in the country. Former Capitol Hill staffer Peter Olsen (R) is favored over Rep. Nick Lampson (D), who defeated a write-in candidate in the wake of Rep. Tom DeLay‘s (R) late resignation.

In Arizona, Representatives Gabby Giffords (D) and Henry Mitchell (D) need to win reelection in Republican-leaning districts. The open seat of retiring Rep. Rick Renzi (R) leans Democrat right now, mostly because of the cash advantage in that race.

For Republicans in the Southwest, winning back DeLay’s seat is offset by losing Renzi’s seat. Democrats +1.

Mountain West: (Colorado, Wyoming, Utah, Idaho, Nevada)

Democrats have a few opportunities in this region while facing no threats. Rep. Marilyn Musgrave (R-Colo.) is perpetually vulnerable, and hers is the only competitive House race in the state. Musgrave is a slight favorite over former congressional staffer Betsy Markey (D).

In Wyoming, Democrats are making a spirited run at the open at large House seat, although they would rather be facing Rep. Barbara Cubin (R), who is retiring. In Idaho, meanwhile, Rep. Bill Sali (R), not well respected by his peers, faces a legitimate challenge from businessman Walt Minnick (D).

In Nevada, Rep. Dean Heller (R) appears to be settling in nicely in the 2nd District. Conservative primary opposition faded away, and while he faces a rematch against his strong 2006 challenger, academic Jill Derby (D), this time Heller has a 3-to-1 cash advantage. No Change.

Pacific Coast: (Alaska, Hawaii, Washington, Oregon, California)

Republicans missed their best chance to hold onto Alaska’s sole House seat when they renominated embattled Rep. Don Young (Alaska), under investigation along with much of the state party’s old guard. Young is now the underdog against former State Rep. Ethan Berkowitz (D).

The closest race in Pacific Coast states could be Rep. Jerry McNerney‘s (D) fight to hold onto the California seat he took from Rep. Richard Pombo (R) two years ago. Right now, McNerney is the slight favorite over former state Assemblyman Dean Andal (R). California State Sen. Tom McClintock (R) is no shoo-in, but he is the favorite in the race to replace retiring Rep. John Doolittle (R).

In Oregon, Republicans seem to have squandered their shot at picking up the seat of retiring Rep. Darlene Hooley (D). The brutal primary there, and ugly charges following nominee Mike Erickson (R) around make State Sen. Kurt Schrader (D) the favorite.

In Washington, second-term Rep. Dave Reichert (R) once again has to fight to keep his job, but as of now, he looks to be the frontrunner. Democrats +1.

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Written By

Mr. Carney served as a reporter for Bob Novak from 2001 to 2004, and from 2007 to 2008 as the senior reporter and, upon Novak‚??s retirement, editor of the Evans-Novak Political Report.

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