During Friday's debate, John McCain assiduously and inexplicably avoided using the issue that might have won him the debate and the presidency: opposition to a taxpayer-funded bailout of the financial crisis.
Congress is about to pass - and the president is about to sign - a bill that the American people detest by 2:1 margins. When Americans realize that there is, indeed, an alternative to handing over $700 billion to financial institutions as a reward for their failure, opposition to the idea will swell even further.
The bailout ideas proposed by the House Republicans and trumpeted by former Speaker Newt Gingrich make eminent sense. Indeed, they make so much sense that it is as if the roles of the parties have been reversed. It is the Republicans who are demanding that the banks and financial institutions pay for their own bailout, granting them only a mixture of loans and premium-paid insurance, while the Democrats want to pass the hat among the taxpayers to buy their dirty paper.
In an unusual act of political foresight and skill, the normally dead-headed House Republican leadership has crafted a platform that can carry the party to victory in November. All that remains is for the Party's candidate - and perhaps even its president and Treasury Secretary - to get on board. McCain can recover at the negotiating table the economy issue he lost in Friday's debate. He needs to have the courage of his convictions and insist on a bailout without requiring taxpayer-funded purchase of defunct mortgages from failing institutions.
The difference in the bailout plans is, of course, largely cosmetic. Dead paper is dead paper whether it is on the books of the government, purchased from banks, or on the books of the banks, insured by the government. The game is the same: Through loans or grants fund the deficient debt service on the defaulted mortgages until homes can recover their value in the cyclical real estate market.
But it makes all the difference in the world politically if this task is accomplished by buying bad debt or by lending the bankers the money to cover their current losses while they keep their bad debts on their books and by insuring them against future losses.
Loans are politically viable. Purchase of bad debt with tax money is not.
The Democrats and our politically-challenged president have failed to appreciate the difference between spending and lending. Treasury Secretary Paulson can be excused for not realizing it. Politics is not his thing.
But John McCain must realize the crucial distinction and must use his leverage to stop a taxpayer-funded bailout, insisting instead on loans and insurance.