The state of play

Barack Obama and John McCain are headed to Mississippi and House Republicans have sent a more credible negotiator to the table. Sen. Harry Reid and President Bush, for once on the same page, both seem optimistic that a bailout bill could get done within days.

Indeed, Friday has gotten off to a much better start after the disastrous White House sessions ended in such partisan acrimony Thursday. Treasury officials, along with congressional negotiators from all parties — including the disgruntled House Republicans — are meeting right now in the Capitol hoping to create a breakthrough that holds this time around.

There’s a long way to go for both chambers to pass a bill, and this roller coaster could still get derailed at any point.

But Reid, in his most forceful comments on the situation, seemed more confident Friday morning.
“We’re going to get this done and stay in session as long as it takes to get done,” the Senate majority leader said. “The time is now for House Republicans to come to the negotiating table and for presidential politics to leave the negotiating table.”

Just as Reid was making these declarations on the Senate side of the Capitol, it seemed as if he was getting his wish. House Minority Whip Roy Blunt (R-Mo.) had replaced Rep. Spencer Bachus (R-Ala.) — and unlike Bachus, Blunt had been empowered to negotiate on behalf of the House GOP.

But negotiating and agreeing are two different things, a point driven home by the broadside launched Friday morning by Texas Rep. Jeb Hensarling, the chairman of the Republican Study Committee.

“It is ludicrous to think that House Republicans are ‘holding up’ any sort of deal, as Democrats falsely claim,” Hensarling said in a statement. “If Speaker Pelosi and [House Financial Services Committee] Chairman [Barney] Frank believe that the Paulson plan is the only plan that can save the American economy, they have a moral obligation and a duty to pass it. The Democrats are the majority party in the House, as I have been consistently reminded by Chairman Frank. The truth is that Democrats can pass the Paulson plan in an hour if they believe it is the right thing to do. That is their prerogative.”

On Thursday, Bachus issued an unusual, and somewhat humiliating, press release telling reporters that he was not sanctioned to sign off on a deal — a point he made repeatedly in a three-hour Capitol negotiating session, according to people familiar with that session.

Minority Leader John A. Boehner followed up Friday with a statement that showed the House GOP was much more engaged in direct negotiations than it was yesterday.

“As bipartisan economic talks continue today, I have asked House Republican Whip Roy Blunt to represent the interests of House Republicans during the discussions,” Boehner said. “House Republicans continue to support a plan that will protect the interests of families, seniors, small businesses and taxpayers.”

President Bush warned that "the legislative process is sometimes not very pretty" but he predicted that Democrats and Republicans will "come together and pass a substantial rescue plan."

So now it’s down to nuts and bolts of legislative proposals, and Banking Committee Chairman Chris Dodd (D-Conn.) says there are three “non-negotiable” items in this bailout package. The must-haves, according to Dodd, are executive compensation caps for companies that take the bailout, a taxpayer benefit such as stock warrants that allow the government to reap profits from the bailout investments, and strict oversight of the Treasury plan.

“This is not a final bill,” Dodd said.

The biggest remaining hurdle, even with key House Republicans now in the room, is the fact that many House conservatives are just fundamentally opposed to the core idea of giving the Treasury secretary the authority to buy up $700 billion in bad debt from financial institutions. The House GOP alternative — a mortgage insurance program to create liquidity in the market — has been dismissed by Treasury Secretary Henry Paulson. It’s not clear if House Republicans will walk from the negotiating table if that idea doesn’t at least get some consideration.