I wasn’t surprised in the least when Sen. John McCain (R-Ariz.) flew back to Washington last week to put a stake through the heart of the Republican Party’s effort to kill the Affordable Care Act. That’s because I remember the last time that McCain interrupted himself to fly back to town.
He was running for president then, against Illinois Sen. Barack Obama, in 2008. The financial crisis had come to a head after a year of growing apprehension. Lehman Brothers had failed on Monday, Sept. 15. Panic was taking hold in global credit markets for the first time since 1933.
Acute problems had spread beyond the banks. By Tuesday, Sept. 16, 2008, insurance giant American International Group was on the verge of failure, thanks to the effect of plummeting share prices on its derivative and stock-lending businesses. Treasury Secretary Henry Paulson Jr., had begun calling both candidates daily to brief them, hoping to keep them from saying something that might upset the markets.
On the stump Sept. 16, McCain said, “We cannot have the taxpayers bail out AIG or anybody else.” Paulson phoned immediately to talk him back from that position. The next day McCain reversed himself, foreshadowing the days ahead.
Two days later, Paulson and Federal Reserve Chairman Ben Bernanke persuaded President George W. Bush and leaders of both parties, meeting in the office of Speaker of the House Nancy Pelosi, to accept the hastily drafted Troubled Assets Relief Program (TSRP) bill. And on Friday, Sept. 19, Friday, Bush stood in the White House Rose Garden, along with Bernanke, Paulson and SEC chairman Christopher Cox, to ask Congress to approve a hazy $700 billion bailout plan. By the following Tuesday, it was clear that the measure lacked the necessary Republican votes to pass in the House.
With the first presidential debate scheduled for the following Friday, McCain announced that he was suspending his campaign in order to fly back to Washington. He asked for a meeting with President Bush and Obama. Paulson later wrote that he was “dumbfounded” that the president had agreed to such a conclave. (I am relying here on Paulson’s memoir, On the Brink: Inside the Race to Stop the Collapse of the Global Financial System.) Bush explained that he felt he had little choice.
The meeting was held; Obama and his chief economic adviser Lawrence Summers danced rings around the Republicans: McCain spoke only when called upon at the end, and the meeting dissolved in chaos at its end. In their televised debate that Friday, Obama and McCain condemned Wall Street, but neither mentioned the bailout. Mostly they argued about Afghanistan and Iraq. Obama decisively won the debate.
The following Monday the TARP bill was defeated in the House. When it finally passed three days later, as the banking system continued to threaten to collapse, McCain got little credit for his dramatic gesture. Paulson wrote:
"His return to Washington was impulsive and risky, and I don’t think he had a plan in mind. If anything, his gambit only came back to hurt him, as he was pilloried in the press afterward, and in the end I don’t believe his maneuver significantly influenced the TARP legislative process.
"A number of people I respect on the Hill have a different view. They believe McCain ended up being helpful by focusing public attention on TARP and galvanizing Congress to action. And John did later try to find ways for House Republicans to support legislation. But Democrats absolutely did not want him to get any credit. They wanted the economic issue as their own.''
Looking back, McCain was a central player in one of the great dramas of the 21st Century. The leaders of both parties in Congress, a reluctant administration, central bankers around the world, and both U.S. presidential candidates in an election year – they all agreed on measures that, after many adjustments behind the scenes, prevented a second Great Depression.
Granted, it had been ugly. Every actor displayed a wart or two. “There was no hiding McCain’s rudderlessness over the [first few] days, as he lurched from blunder to blunder,” was how John Heilemann and Mark Halperin described his introduction to the crisis in Game Change. Sen. Lindsey Graham (R.-S.C.) repeatedly helped his good friend McCain maintain his bearings. But strip away all the self-interested accounts of the matter by technocrats, and what’s left is a distinct harbinger of McCain’s dramatic action last week.
In a speech two days before his fateful vote last week, McCain took stock of the battles of the last eight years.
"Our deliberations today are more partisan, more tribal more of the time than any other time I remember…. Both sides have let this happen. Let’s leave the history of who shot first to the historians. I suspect they’ll find we all conspired in our decline – either by deliberate actions or neglect…
"The Obama administration and congressional Democrats shouldn’t have forced through Congress without any opposition support a social and economic change as massive as Obamacare. And we shouldn’t do the same with ours.''
Since I clearly remembered the White House event, in March 2009, with which Obama opened his campaign to reorganize healthcare-insurance markets, I couldn’t resist a taking a little peek back at the history of what happened next. Obama’s proposal’s was patterned on Massachusetts’'s 2006 adoption of “Romney Care,” itself based on a Republican proposal for an individual mandate advanced ten years before, in opposition to Hillary Clinton’s more ambitious plans. Obama invited 150 participants to a conference, drawn from all corners of the debate, including Congressional Republican leaders.
In “The Party of No,” a chapter in The New New Deal:The Hidden Story of Change in the Obama Era, author Michael Grunwald describes the evolution of the Republican leadership’s thinking the wake of Democratic victories – not just the White House, but control of both houses of Congress. Eric Cantor (R.-Va.) was the minority whip then, transparently coveting minority leader John Boehner’s job. Cantor’s deputy, Kevin McCarthy (R.-Calif.), and Paul Ryan (R.-Wis.) were said to be the GOP’s “young guns.” Rep. Mike Pence (R.-Ind. chaired an initial conference of the party’s leadership in Annapolis. Grunwald wrote:
"The new leaders who gathered in Annapolis had a new mantra. Our mistake was abandoning our principles, not following our principles. They saw John McCain as a typical Republican In Name Only (RINO) who had sought electoral salvation in ideological equivocation – and look what happened to him. They even revised their opinions of George W. Bush, who in retrospect seemed less a conservative hero, more a big-spending apostate.''
“Most important, Republicans need to stick together as a team,” exhorted Senate Minority Leader Mitch McConnell. And so they did. The Tea Party election came next, in 2010. Republicans took back the House. Obama was re-elected in 2012. In 2014, Republicans took back the Senate. And by 2016, the strategy of full-throated opposition seemed to have worked. Republicans won the White House.
At least in the matter of healthcare legislation, the Republicans clearly fired the first shot, opposing a program of their own invention just because the opposition party had embraced it. Let McCain’s exaggeration on this count pass. In the offer of olive branches, no more than in lapidary inscriptions, is a man upon his oath. The path back to the state of mind Senate rules describe as “normal order” is much as McCain described it:
Incremental progress, compromises that each side criticize but also accept, just plain muddling through to chip away at problems and keep our enemies from doing their worst isn’t glamorous or exciting. It doesn’t feel like a political triumph. But it’s usually the most we can expect from our system of government, operating in a country as diverse and quarrelsome and free as ours.
In “The Sanctimony and Sin of G.O.P, ‘Moderates','' New York Times columnist Paul Krugman, writing last week before McCain’s vote last Thursday against his party, invited readers “to consider the awfulness of Senator John McCain.” Indeed, Krugman condemned all politicians “who pretend to be open-minded, decry partisanship, tut-tut about incivility and act as enablers for the extremists again and again.” Krugman wrote:
"I started with McCain because so many journalists still fall for his pose as an independent-minded maverick, ignoring the reality that he’s a reliable yes-man whenever it matters.''
Krugman has got it exactly backwards. On the two occasions of the last 10 years when it has mattered most, McCain stood in the center, with the majority consensus, against his party’s leaders (and, often enough, in matters of lesser issues as well, especially immigration and campaign finance). Krugman, himself an unbridled partisan, should stop insisting that there are no Republican moderates. The road back to “regular order” begins with giving credit where credit is due.
David Warsh, a longtime business and political columnist and an economic historian, is proprietor of economicprincipals.com.