SO HERE'S THE state of play as the Great Depression redux edges ominously closer. The Paulson Plan failed today, with a solid majority of Republicans voting against it. The opposition Republicans fall into two camps:

1) The Mike Pence doctrinaires who welcome a free market curative like a Depression for our current woes. I guess they view it as sort of the economic equivalent of that stuff you drink the night before a colonoscopy. As misguided as Pence and his minions are, they at least have a certain nobility complementing their foolishness. I would be remiss if I didn't note that a significant subdivision of the Pence camp rejects the counsel of virtually everyone who knows anything about economics and instead believes that our current situation isn't so dire. Call it conservative magical thinking.

2) A bunch of other Republicans who would have voted for the Paulson Plan had Nancy Pelosi not said some stuff that hurt their feelings just prior to the roll call. They had thought passing the Paulson Plan was an urgent national priority. Then, the Speaker said some stuff that made personal pique take priority. Outdumbing the Pence Republicans was a tall task--this coterie of GOP representatives was up to the task.

So what will happen? We're in uncharted territory here, and I don't want to tacitly posit an economic competence that I lack. However, the many people I've spoken with who do understand economics and our financial system are gravely concerned--all of them. The only place you can find people who aren't gravely concerned are on Capitol Hill and in the media, the two places in our society where people are paid to offer opinions on things they know nothing about. Suffice to say that if our banking and financial system doesn't recover its footing, the overwhelming consensus is that we're headed for very rough times.

Here's what's been lost in the debate while people on both the right and left have offered ignorant jeremiads about "bailing out Wall Street." If the economy tilts into a deep recession or even a depression, it's not the wealthy or even Barack Obama's cherished middle class who will pay the deepest price. In any such circumstance, it's the people on the economic margins who get hurt the most. The ones without a nest-egg and without a 401(k) are the ones who have no safety net when they lose their jobs and health insurance. If unemployment goes from 6 percent to 10 percent, it won't be the investment bankers who start heating their homes at 56 degrees in January. Populist rhetoric is almost always misguided. That has never been more the case than over the past week.

In case you're looking for political ramifications, the news is not good if you're of the Republican persuasion. As much as I would like to lay all of our forthcoming problems at the feet of the House members whose feelings Nancy Pelosi so easily bruised, they're a bit player in this drama. A Republican occupies the White House, and the buck stops with him. It's a Republican economy, and it's a law of political physics that we will pay the price for its shortcomings.

In case you're looking for ways forward, there are plenty out there. A few days ago, Bill Kristol linked to a provocative piece by Harvard professor Lucian Bebchuk that suggested the best way to recapitalize our faltering financial institutions would be via rights offerings backstopped by the federal government. Translated into English, this plan would address the financial system's most urgent need--recapitalizing the financial institutions that need it--directly. What's more, the recapitalization would come from shareholders, not taxpayers. It likely wouldn't cost Joe Sixpack a red cent. It would also keep the federal government out of the banking business, a matter rightly near and dear to the hearts of libertarian leaning Republicans. And yet they never considered this plan, such is the state of their current non-constructive pose.

The Paulson Plan only addresses (or should I say addressed) the need for recapitalization indirectly, by providing the funds necessary by gobbling up presently undesirable mortgage backed securities. The Republicans could have spent the past two vital weeks coming behind a plan like Professor Bebchuk's (or another one) assuming Paulson's plan was unacceptable. Instead, they dithered. Some in the GOP obviously would rather have a Great Depression redux instead of taking the necessary steps to prevent it. Call it a twisted matter of principle. My point here isn't to lobby for the Bebchuk Plan. My point is to show that there are potential solutions out there that the political class hasn't seriously (or even frivolously) addressed.

There's an opportunity here for the McCain campaign. Of course, there's also an opportunity for the Obama campaign. Answers are needed, and lord knows the two senators have a big enough platform to provide them. But as far as Obama is concerned, his "prudence" by now is a known quantity. We won't see any game changing propositions emanate from this preternaturally cautious politician. Obama lags events--he doesn't lead them.

That leaves it up to McCain. Frankly, whether he can politically overcome a millstone the size of this economic crisis is questionable. Let's face it--the financial meltdown is the equivalent of Mark Foley's salacious instant messages on stilts. But there remains the matter of duty. House Democrats, House Republicans, Senate Democrats, Senate Republicans and the White House have all been unable to move the ball forward. Collectively, they've spent the past ten days squabbling over a badly flawed bill that even if passed may still not have saved us from a very deep recession or worse.

The only guy out there with the political juice to offer something new and get it seriously considered is John McCain. Even if he got a good bill passed, it might not be enough for him to win the election. But it would be his finest hour.

Dean Barnett is a staff writer at THE WEEKLY STANDARD.

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