OBAMA PLAYS LEADING ROLE IN WHITE HOUSE TALKS, McCAIN CAUGHT PLOTTING WITH HOUSE GOP TO SABOTAGE BUSH/PAULSON PLAN; BAILOUT PLAN IN BIG TROUBLE, LOOK FOR VERY NERVOUS MARKETS.

WALL STREET BAILOUT. After a day of optimistic news that both parties had "fundamental agreement" for Treasury Secretary Henry Paulson $700 billion bailout plan, the deal fell apart in bitter arguing during the meeting at the White House called by President Bush. The President reportedly convened the meeting at the urging of John McCain. Instead, the meeting backfired on both Bush and McCain. When the President called on House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid to set forth the Democratic plan, they jointly deferred to Barack Obama, who set forth the Democrats' concerns. One Republican at the meeting told The Politico that Obama's leading role -- versus McCain's nearly silent role at the meeting -- was "an ambush" and the Democrats "did a very good job" of surprising Bush and McCain. Obama immediately raised concerns that House Republicans had spent the day secretly plotting with McCain to sabotage the Bush/Paulson plan. Obama said the Democrats would not be party to advancing any bailout plan if McCain and the Congressional Republicans were not solidly behind the plan. Congressman Paul Ryan (R-WI) -- one of the fiscal hawks who had been crafting the conservative alternative plan -- confirmed that the House Republicans had met with McCain during the day as they worked on the rival plan. House Republicans complained they felt "squeezed" by the Democrats, Bush, Paulson, and a sizable bipartisan Senate coalition to back the bailout plan. "This is such a crisis I'm not going to draw some line in the sand. We can't leave without doing something, but we don't think the votes are here for Paulson," said Ryan. As the White House meeting degenerated into bickering, the Democrats walked out to caucus in the East Room. Paulson ran after the Dems and -- according to the newspaper -- literally got down on his knees "begging that they not 'blow up' the [bailout] legislation." Additionally, Politico reported that "the whole sequence of events confirmed [Paulson]'s fears about the decision by Bush, at the urging of McCain, to allow presidential politics into what were already difficult negotiations." While the various factions -- along with Paulson shuttling between them -- were meeting Thursday night to start from scratch on rival plans, it is clear there will be no deal before Friday night's debate. Look for a potentially calamitous day on the world markets on Friday, as the situation is very fluid.

P2008. If Barack Obama goes forward with his plan to attend the scheduled debate on Friday night, McCain now has some tough decisions to make. Does he let Obama have a gigantic national TV audience all to himself ... or does he go back on his earlier pledge and instead fly to Mississippi for the debate? And will the topic be switched from foreign policy to the economy, possibly during the debate at the urging of the candidate(s)? Stay tuned.

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US SENATE. The latest independent polls for the US Senate match-ups:
DELAWARE (SurveyUSA): US Senator Joe Biden (D) - 64%, political consultant Christine O'Donnell (R) - 32%.
MAINE (SurveyUSA): US Senator Susan Collins (R) - 55%, Congressman Tom Allen (D) - 39%.
MASSACHUSETTS (Rasmussen): US Senator John Kerry (D) - 65%, businessman Jeff Beatty (R) - 30%.
NORTH CAROLINA (Rasmussen): State Senator Kay Hagan (D) - 48%, US Senator Elizabeth Dole (R) - 45%.
OERGON (SurveyUSA): House Speaker Jeff Merkley (D) - 44%, US Senator Gordon Smith (R) - 42%.

Posted by Ron Gunzburger - 09.26.08