Free The New New Deal by Michael Grunwald

son-of-a-gun. He was dealt a tough hand.”
    The next day, the Fed had to bail out AIG, a gigantic insurance company that had fallen down the wormhole selling exotic financial instruments. McCain came out against the bailout, then changed his mind the next day.
    The economy was going down, and so was McCain.
    A t Nasdaq, Obama had tried to warn Wall Street types that carnage on Main Street could create carnage for them. But the reverse was also true. A credit meltdown could make it impossible for ordinary Americans to get home loans, car loans, or business loans. A market meltdown could eviscerate their companies, jobs, and 401(k)s. AIG showed that it could even imperil their insurance policies. The Great Depression began as a financial crisis, but it’s remembered for 25 percent unemployment, black-and-white photos of impoverished families, and sagas of suffering like The Grapes of Wrath . As Bernanke says, when elephants fall, the grass gets trampled.
    “Everyone knows that depressions suck,” says Berkeley economist Christina Romer, the Depression scholar who would become Obama’s first Council of Economic Advisers chair. “But when you study this stuff, you understand that depressions really, really suck.”
    Bernanke and Paulson decided the only way to avoid Depression 2.0 would be a mammoth Wall Street rescue. They bluntly warned leaders of both parties that unless Congress quickly backstopped the banking system, the results would make the 1930s look mild. Pelosi balked at bailing out the greed-blinded gamblers of Wall Street without helping Main Street, but Paulson warned that Main Street would be eviscerated if Washington didn’t save Wall Street pronto. “Nancy, we’re racing to prevent a collapse of the financial markets,” he said. 81 “This isn’t the time for stimulus.”
    For the next two weeks, Washington was riveted by the fate of Bush’s Troubled Asset Relief Program, a $700 billion bailout for the nation’s largest financial institutions. Reid, McConnell, Pelosi, and Boehner allagreed to support TARP, but Boehner struggled to persuade House Republicans to back the rescue. After doing Bush’s bidding for eight years, they were choosing an extremely inopportune time to rebel.
    Then McCain threw the negotiations into turmoil by dragging the electoral circus to Washington, impulsively announcing he was “suspending” his campaign to help forge a deal, only to change his mind the next day after a surreal White House meeting where he wouldn’t even commit to support a deal. While Obama spoke for congressional Democrats, offering constructive suggestions on a path to consensus, McCain sat sullenly at a meeting he had demanded himself. “Obama took command,” says one Republican who attended. “He was the only one who seemed presidential—not the president, definitely not McCain.” After McCain stunned the room by refusing to take a position, the meeting dissolved into shouting and finger-pointing; Paulson got on his knees to beg the Democrats not to blow up TARP. They didn’t, but Pelosi and Reid did stage symbolic votes on new stimulus spending the next day, further poisoning the atmosphere on the Hill. They knew they couldn’t pass a law, but they wanted to put Republicans on record against aid for struggling families.
    On, September 29, Pelosi marched TARP to the floor, hoping the glare of the spotlight would force Republicans to support it. But her speech blaming Republicans for the crisis only solidified their opposition, as did a barrage of F-bombs from Democratic conference chair Rahm Emanuel, a force of nature from Chicago who would soon become Obama’s chief of staff. “Rahm was standing in the middle of the well, frothing at the mouth, accosting people—that’s one of the reasons they lost,” recalls Congressman Steve LaTourette, an Ohio Republican. The vote failed, and the Dow plummeted a record 778 points.
    The crash finally inspired action. The media backlash against