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Final debate a lagging indicator of reality

Despite the testiness at points, which made the event good TV watching , the third Obama-McCain debate mostly ended up where the previous two had been: a familiar ritual which could not quite encompass the shattering new financial reality.
Image: Sen. Barack Obama and Sen. John McCain
Democratic presidential candidate Sen. Barack Obama listens to his Republican rival Sen. John McCain Wednesday night at the final presidential debate of 2008.NBC News
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Republican presidential candidate Sen. John McCain tried to make the case in the final presidential debate Wednesday night that Americans still, after all these months, do not know Democratic presidential candidate Sen. Barack Obama.

Obama needs to explain his past, McCain told viewers.

McCain targeted Bill Ayers, who once served on a foundation board with Obama.

Ayers, a leader of the terrorist Weather Underground in the 1970s, has said that he took part in the bombings of New York City Police Headquarters in 1970, the Capitol building in 1971, and the Pentagon in 1972.

"I don't regret setting bombs," Ayers said in 2001. "I feel we didn't do enough."

Obama said he’d condemned Ayers’s violent past, had not involved him in his campaign, and wouldn’t have him as an advisor in the White House.

McCain also assailed the liberal group ACORN which has run a voter registration effort which is under investigation in Nevada and other states after some of its organizers turned in fraudulent registrations to election officials.

'One of the greatest frauds in voter history'
“We need to know the full extent of Senator Obama's relationship with ACORN who is now on the verge of possibly perpetrating one of the greatest frauds in voter history,” McCain said.

McCain at several points seemed exasperated and annoyed with Obama: “Maybe you ought to go down there,” he snapped at the Illinois senator, referring to the South American nation of Colombia, with which the United States has a pending trade accord.

Assessing McCain’s performance in the post-debate spin room, Sen. Charles Schumer, D-N.Y., said, “He was feistier” than in previous debates, but was “angry, busy jabbing, playing the debating game.”

He added, “What John McCain doesn’t understand is the old politics is over…. The old politics of bringing up guilt by association and finding some organization and saying, ‘Oh, you touched it 25 years ago,’ just doesn’t work any more when people are worried about their jobs, worried about their pay checks.”

“They are running a campaign that might have worked in the year 2000, and in 2004, but does not work in 2008,” Schumer said, adding with a somewhat artificial air of sympathy: “It’s sort of sad — because John McCain is sort of living in the past.”

'Came out fighting'
Schumer’s fellow senator, Joe Lieberman, the self-described independent Democrat from Connecticut, told spin-room reporters that McCain “came out fighting tonight. I was really proud of him.”

Asked whether McCain was suggesting there were still a lot Americans who didn’t know about Obama, Lieberman said, “Well, that’s part of it.” Yet Lieberman insisted, “This is about the future, not about the past.”

Was McCain annoyed at Obama? “If Sen. McCain seemed annoyed, it was only because there were a few times where he thought that Sen. Obama didn’t answer his questions. John McCain challenged Barack Obama — that’s the way the debate should be,” Lieberman said.

Despite the testiness at points — which made the event good TV watching and more volatile their two earlier encounters — the third debate mostly ended up where the previous two had been: a familiar ritual which could not quite encompass the shattering new financial reality.

Keeping up with the financial crisis
The financial crisis — an unforeseen and unimaginable event, especially in the final weeks of a presidential campaign — seems to keep getting bigger, more threatening and more intractable, and the debates could not keep up with it.

No presidential candidate since Franklin Roosevelt in 1932 has had to contend with such fundamental questions about the role of the federal government in saving the economy from collapse.

The feeling Wednesday night at the final debate was that the most crucial actions and most crucial actors, those who’ll determine the conditions under which the next president must operate, were elsewhere.

Some were on Wall Street, others were in China and in foreign central banks across Europe and in Japan.

The financial system has endured such a shock that politicians and those who spin for them haven’t caught up.

Among the daunting and nearly unprecedented tasks facing the new president and his Treasury secretary in about 90 days: “Managing what is now a partially nationalized financial system, and regulating what will likely be the new, re-privatized financial system,” said Brad Setser, an economist at the Council on Foreign Relations in a pre-debate briefing Wednesday.

Nationalization of the banks
Nationalization of the financial sector — an idea deemed radical in 1948 when left-wing presidential candidate Henry Wallace advocated it — is now a partial reality.

What does that mean for the future of the American economy? Neither McCain nor Obama had much insight to offer on this historic development.

Over the past two weeks the United States government has made a public commitment of $2.25 trillion “to backstop the financial sector,” said Setser.

Such a number makes the annual defense budget of $530 billion seem relatively small by comparison.

Yet during the debate the two rivals reverted to what they had done in their first two encounters: quarrelling over much smaller numbers, such as a $6.8 billion contract for Boeing or the ethanol subsidy.

The debates were a lagging indicator of the frightful financial reality of 2008.