Both John McCain and Barack Obama (like most of Washington) are supporting the bailout. But despite the bipartisan support for the bill, this may prove to be the single culminating event that loses McCain the election.
By nature of being a moderate republican, McCain tends to share a lot of common ground with Democrats. There really are not many issues that separate him from Barack Obama. The one big one that does, though, is their fiscal platforms. With the economy likely to be at the forefront until election day, voters will no doubt be judging both candidates on their strategies for fixing it.
So assuming that McCain and Obama both openly support the bailout, and it passes (as expected), how is the American public likely to interpret things post-bailout?
Well, since both candidates will no doubt proclaim that the bailout is unpleasant, but essential to the functioning of the economy, the logical conclusion is that free markets do not work without serious government intervention. This, of course, is the center of Barack Obama’s economic policy, as he contends that the economy needs regulation to protect the middle class. McCain’s central selling point is that the economy works better when government is smaller, and thus we lower taxes across the board.
So how will this actually play out? No doubt, Obama will aggressively push the idea that a massive intervention was needed to correct the problems that occurred because of deregulation. McCain will then either have to contradict his support for the bailout, or contradict his own economic policies. Checkmate Obama.
The biggest irony is that this could have won McCain the election, if he had taken the conservative (and popular) stance. By rejecting the bailout, McCain could have reinforced his position as a true maverick, and demonstrated how a commitment to free markets and smaller government directly benefits the people. In effect, he could have pulled in a broad sector of populist support, while simultaneously energizing his existing Republican base.
At this point, it’s probably too late. But in November, when he looks back on the results of the election, McCain may very well realize that he lost by simply failing to act as the small government maverick he promised to be.