During last night's second presidential debate, Sen. John McCain made some news by proposing a federal bailout of home mortgages in an effort to help "stabilize home values." The plan, which McCain admitted would be "expensive" would allow the U.S. Treasury to buy distressed mortgages directly from the holders and renegotiate a new fixed-rate loan at the home's current market-adjusted value. The idea is to help struggling homeowners stay in their houses while at the same time boosting confidence in the real estate markets, which McCain said was at the root of the economic crisis.

Sen. Barack Obama did not initially react to McCain's bold stroke, but today, his campaign rejected the idea out of hand. Obama economic adviser Jason Furman said that the plan was simply too expensive. "John McCain's plan to overpay for bad mortgages by handing taxpayer dollars over to big financial institutions is erratic policy-making at its worst, and its not the change we need to strengthen our economy, create new jobs and keep Americans in their homes. The biggest beneficiaries of this plan will be the same financial institutions that got us into this mess, some of whom even committed fraud." That's a pretty strong condemnation of the McCain plan. The trouble for Obama, however, is that he was advocating much the same idea just two weeks ago.

On September 24th, at the height of the financial crisis, Sen. Obama said that the very mortgage bailout plan McCain embraced at the debate last night was worthy of consideration.

We should consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage-backed securities.

[I would] encourage Treasury to study the option of buying individual mortgages like we did successfully in the 1930s."

On home mortgages, Obama was for buying them before he was against it.

He was right there on C-SPAN, an actual congressman and opponent of the Bush Administration's bailout of Wall Street, speaking on the House floor about those mysterious warnings Henry Paulson supposedly gave to the doubting lawmakers before the $700 billion bill was first rejected by Congress.

"The only way they can pass this bill is by creating and sustaining a panic atmosphere," Congressman Brad Sherman said Thursday. "Many of us were told in private conversations that if we voted against this bill ... there would be martial law in America."

The next day, the House passed the Senate's version of the bailout -- the one McCain approved, with all those pork earmarks he loves so much -- and we were miraculously saved from an American Police State. For a few more days, anyway. But would it really be so bad, to live under Bush-Paulson-McCain tyranny?

As the stock market woes dominate television and computer screens today, one big casualty is the McCain campaign's new and improved attack dog strategy. Why? Two reasons. First, the oxygen used to talk about the regurgitated stories of William Ayers and, yes, Jeremiah Wright, is now being sucked up by fears about what lies ahead for our country and the world. Second, the news that the DOW has sunk below 10,000, and that 401K plans are withering on the vine, keeps the spotlight on matters economic, and that's what has driven McCain's numbers in the tank in the first place. In other words, diversion mission not accomplished. It's still the economy, stupid!

And, as one of McCain's strategists told the NY Daily News today, "If we keep talking about the economic crisis, we're going to lose."

CNN's Campbell Brown recently attracted attention with a series of confrontational moments that became internet hits. The fun seems to have started early last month when Brown pressed McCain adviser Tucker Bounds to give one specific example of Sarah Palin's foreign policy experience (David Knowles posted the clip here).

Brown struck the McCain campaign again later in the month, accusing them of sexism for sheltering Palin from the media. "Tonight I call on the McCain campaign to stop treating Sarah Palin like she is a delicate flower that will wilt at any moment," said Brown.

On September 25, Brown launched into a populist attack on Henry Paulson and George W. Bush's handling of the housing crisis, which led to the bailout. Brown also spread the blame to Democrats who supported Fanny Mae and Freddie Mac.

So what's motivating this new, more forceful Campbell Brown? In a profile by Jacques Steinberg published yesterday in The New York Times, Brown said, "As journalists, and certainly for me over the last few years, we've gotten overly obsessed with parity, especially when we're covering politics. We kept making sure each candidate got equal time - to the point that it got ridiculous in a way."

Stepping away from the debate for a moment, today we learned that employment in America declined for the ninth straight month. We lost 159,000 jobs in September, the biggest number in 5 years. And news has also come in today that California Governor Arnold Schwarzenegger has just written to Treasury Secretary Henry Paulson to say that his state may need an emergency loan of $7 billion from the federal government. Why? The credit noose. They can't get the usual short term loans to cover their expenses.

With McCain's numbers tanking, and the campaign pulling out its troops from Michigan, it seems that you can hide behind a maverick mask for so long.

While Senators should be applauded for finally recognizing that America's financial system is on the brink, one can't help but wonder why in the world they included a provision to protect a company that makes children's toy arrows into the bailout bill. Did they think no one would notice the pork added to what is probably the most important bill of a lifetime? Amazing (via Bloomberg):

Senators attached a provision repealing a 39-cent excise tax on wooden arrows designed for children to an historic $700 billion financial-markets rescue that passed tonight by a vote of 74-25. The provision, originally proposed by Oregon senators Ron Wyden [D] and Gordon Smith [R], will save manufacturers such as Rose City Archery in Myrtle Point, Oregon, about $200,000 a year.

It's one of dozens of tax breaks benefiting Hollywood producers, stock-car racetrack owners and Virgin Islands rum-makers included in the broader legislation in an effort to win support from House Republicans, whose defection contributed to a rejection of an earlier version of the legislation two days ago on a 228-205 vote.

Really? So we couldn't cobble together a majority for the bill unless it included a sizable helping of pork? That doesn't sound like putting "country first." And what does John McCain have to say about it? He, like Barack Obama, voted for the bill, after all.

A spokesman for House Minority Leader, Republican John Boehner said the following of the last minute add-ons:

the inclusion of the tax breaks "will increase the appeal of the package for our members."

I wish I could tell you that I was making all of this up. This is just the kind of thing that makes the public so cynical about Washington's ability to do what's right. And there is a lot about the Senate bill that is right. It significantly raises the FDIC insurance level to compensate for inflation, and extends a whole host of tax credits to ordinary citizens. Most importantly, the bill infuses capital into the financial sector, which, hopefully, will have the effect of loosening the credit noose somewhat.

Unfortunately, we now have to wait to see what pet projects the House will attempt to tack on. Many of these so-called "sweeteners" are sure to leave a bitter taste for many people in the country.

Liza has more, including a PDF of the final bill for your inspection.

What we've witnessed over the course of the last week is something of a perfect storm. With the financial sector teetering on the brink, and election year politics in full swing, reason, foresight, and an orderly distribution of life preservers, have been sacrificed for tantrums of the here and now. Who is to blame for the economic mess we are only starting to glimpse? Everyone. You, me, Wall Street, the Bush Administration, Congress, television pundits, the whole lot of us. A pox on all of our houses!

Americans have long been living on credit. Not just the poor, who often didn't qualify in the first place, but all Americans. As our economy shifted away from manufacturing to a service-centric model, we should have raised a red flag. When we all started playing the stock market back in the 1970's, by tying our retirement savings to Wall Street performance, we didn't blink. When we grew to expect double-digit growth on the value of our homes every single year, we convinced ourselves we'd settled into a new paradigm. In a way, our obsession with the housing and stock markets was itself a big smokescreen for the fact that Americans no longer make things.

Politicians on the left and the right were only too happy to feed the illusion that said, because the Titanic hasn't yet hit an iceberg, it will not hit one anytime soon. Well, we've hit it. And, surprise, there aren't enough lifeboats. To make matters far, far worse, this crisis comes in an election year. Every one of the members of the House of Representatives, and many in the Senate is up for re-election, so forget about them doing what's right for the country, it's political expediency time.

Sen. Barack Obama today proposed a specific idea to help solve the financial bailout impasse gripping Washington. Obama came out behind a plan to more than double the limit on deposits insured by the Federal Deposit Insurance Corporation (FDIC) from the current $100,000 to $250,000. The idea is to bolster confidence in bank customers that their savings are safe and to prevent future bank runs like the one that hit Washington Mutual last week just before it collapsed. It is an idea that has potential to win some more votes for the beleaguered bailout package that failed its first test in the House yesterday. Sen. Obama surely hopes to gain credit for proposing it and perhaps for rescuing the bailout package.

Except that the FDIC limit increase is not Sen. Obama's idea. It's a feature of the House Republicans' alternative bailout plan that Sen. Obama criticized at last Friday's White House meeting. That criticism lead to the meeting degenerating into a partisan shouting match, as Democrats, led by Sen. Obama, used Treasury Secretary Hank Paul son's notes on the Republican plan to attack the Republican leaders present at the meeting.

Sen. Obama has a history of claiming credit for other people's ideas and exaggerating his role or influence on legislation. Members of his own party have bristled at his tendency to include himself for praise over issues in which he has little input. During the Democratic primary, the Washington Post published a story detailing how Sen. Obama claimed in 2006 that he was a central player in an immigration compromise, to the great surprise of the Senators who actually worked on the bill. Earlier this year, while traveling in the Middle East, Obama claimed credit for serving on the Banking Committee in the Senate when he does not. And just last week, Sen. Obama claimed a key role in crafting the economic stimulus package passed in January; a claim the Washington Post called, "a big stretch."

Now Sen. Obama is seeking to claim the Republicans' FDIC insurance limit increase as his own. But Obama also claims that it is Republican policies that have caused the financial troubles on Wall Street. It seems that Sen. Obama was against Republican ideas for fixing the nation's economy before he was for them.

The Corner:

We are in the greatest financial crisis of our lifetimes.
Congressional inaction has put every American and the entire economy at the gravest risk. Yesterday the country and the world looked to Washington for leadership, and Congress once again came up empty-handed.

I am disappointed at the lack of resolve and bipartisan good will among members of both parties to fix this problem. Bipartisanship is a tough thing; never more so when you're trying to take necessary but publicly unpopular action. But inaction is not an option.

Ugh, sigh. Excuse me while I bang my head against the desk.

BANGBANGBANGBANG.

OK, I'm a little calmer now. 35 days before an election. On a day when the public was expressing its overwhelming contempt for Congress and the attempt here to giveaway $700 billion dollars of taxpayer money to Wall Street banks. A move that has never been promised to ultimately fix the problem.

McCain keeps pounding on this mealy mouthed mushy moderate crap that even most of his own party and 40% of the Democrats can't handle.

Does he wonder why he keeps going down in the polls? As Rush Limbaugh said today, bipartisanship is not hard. All you have to do is sell your principles down the river. And keep in mind that McCain's poll numbers were never higher than when he and Sarah Palin were pushing their message that was very partisan.

Yes, I do believe that inaction is not an option here. But inaction is better than bad stupid, throwing-money-down-the-drain and not solving the problem action. God bless the House Republicans and the 95 Democrats who couldn't swallow this plan.

It's up to the Senate tomorrow.

For anyone who hasn't been paying attention, John McCain might seem to be some kind of economic whiz kid who just can't get Warshington to bend to his superior judgment and pass some gosh-darn regulations. Although recent polls suggest that more and more Americans are getting the message, Brave New Films has put together a nice little reminder that McCain is a self-assessed novice on the economy, and a forceful opponent of government regulation of businesses.

The film cuts together pre- and post-crisis footage of McCain, and the contrast is stark. You would think McCain would try to smooth out the turbulence of his pivot somewhat, knowing that, in the age of Youtube, at least some kind of segue is in order.

The filmmaker, Robert Greenwald, will be my guest Thursday at 10pm on Unusable Signal, so you'll have a chance to ask him about the film yourselves.

Tommy Christopher co-hosts "Unusable Signal",on BlogTalkRadio, Tues through Thurs at 10pm, and Fri, and Sat at 11pm. (Eastern) Click here for the Unusable Signal homepage.