A vote Monday on the $700 billion financial rescue hangs over the U.S. presidential campaign even as the next round of political fireworks loomed — the vice presidential debate later this week between veteran Democratic Sen. Joe Biden and Alaska Gov. Sarah Palin, a conservative Republican and novice on the national stage.
World markets initially showed little enthusiasm for the unprecedented plan and were declining Monday. U.S. voters were likewise leery of spending such vast sums of taxpayer money to prop up the failing U.S. financial industry.
But both Democrat Barack Obama and Republican John McCain cautiously backed the plan that was proposed by President George W. Bush and would give the administration broad power to use billions of taxpayer dollars to purchase devalued mortgage-related assets held by cash-starved financial firms. The bailout — the largest in U.S. history — was designed to keep the worst financial crisis since the Great Depression of the 1930s from spreading throughout the economy.
"This is something that all of us will swallow hard and go forward with. The option of doing nothing is simply not an acceptable option," McCain said. Obama said he was inclined to back it because the financial problems have gone beyond Wall Street to affecting everyday consumers.
The package cleared a key procedural hurdle on the House floor Monday morning and a final vote was likely by midday or early afternoon (by evening GMT).
On Monday, Obama was campaigning in Colorado, Biden was preparing for the vice presidential debate Thursday and McCain and Palin were attending a rally in Ohio — one of the most critical states in the Nov. 4 election — now just five weeks away.
Voters are consumed with the flailing U.S economy and McCain and Obama are pounding that issue, portraying themselves as the candidate best prepared to steer the country out of its financial morass.
McCain, the four-term Arizona senator, anoints himself the candidate who can restore financial oversight while slashing wasteful spending and cutting taxes on individuals and businesses. Obama, McCain says, would usher in an era of big government spending programs and high taxes.
Obama, a first-term senator from Illinois, says McCain represents a continuation of the unpopular Bush's economic policies and argues McCain backs corporate tax breaks and lax regulation that have contributed to the financial crisis.
Polls suggest the race now tilts in Obama's favor. McCain's gains after the Republican National Convention earlier this month were fading under the weight of the struggling economy, an issue that does not play to McCain's foreign policy strength.
The bailout plan had threatened to derail the first presidential debate, which went ahead as planned Friday. McCain said early last week that he was suspending campaigning to return to Washington to deal with the economic crisis and sought to delay the debate with Obama until a deal was reached.
McCain showed up in a late-in-the-day change of heart.
By Sunday, both campaigns were taking partial credit for the shape of the financial bailout.
Asked during a television interview Sunday, Obama said his Republican rival did not deserve credit for helping forge the tentative bailout agreement that was announced earlier in the day.
"Here are the facts: For two weeks I was on the phone everyday with (Treasury) Secretary (Henry) Paulson and the congressional leaders making sure that the principles that have been ultimately adopted were incorporated in the bill," Obama said.
At a rally in Detroit, Obama said the measure contained important consumer-friendly provisions he had supported.
He also said Washington had no choice but to act although he said it was an outrage that "we are now being forced to clean up their mess."
Obama also criticized McCain, saying his economic philosophies are out of touch and dangerous for a teetering economy.
Speaking on morning television, McCain said the latest version of the bailout plan meets his insistence of an oversight body to monitor the treasury secretary and limits the compensation of executives of financial institutions applying for loans.
"Let's get this deal done, signed by the president, and get moving, because the real effect of this is going to restore some confidence, and get some credit out there, and get the economic system moving again, which is basically in gridlock today," McCain said.
Later in the week, the vice presidential debate promises a transfixing match between the loquacious veteran Biden and the still-underexposed Palin.
Vice presidential candidates seldom decide elections; people vote for who's at the top of the ticket. But in a contest as close as this one between McCain and Obama, a misstep could set back either campaign in the final weeks before the elections.
Since Palin roused the Republican Party at its national convention earlier this month, she has been undergoing a crash course in foreign policy. Her struggles with some answers in interviews have been lampooned on TV comedy shows.
Biden, who twice has run unsuccessfully for president, perhaps faces the greater challenge. He has years of foreign policy experience and an affinity for extemporaneous speech that can cause him trouble. He already has strayed from campaign talking points and mangled history during his own recent TV interview.