Things were more disciplined on the Democratic side. As the procession moved from Bush’s office to the Cabinet Room, the Republicans noticed that Obama was huddled with Speaker Nancy Pelosi and Senate Democratic leader Harry Reid in a hallway, the three of them plotting in hushed tones. Boehner walked into the room and found his seat next to McCain. “Look,” he whispered, “I think the less you say, the better.”
As everyone found their chairs, Bolten pulled Bush aside. “Mr. President, I never sent you into a meeting of any consequence where I could not tell you what I expected or hoped to have happen,” the chief of staff said. “I just want to apologize in advance.”
By protocol, after his introductory remarks and a quick summary from Paulson, the president turned to his right and recognized Pelosi, the Speaker of the House, to lead off the discussion. “Senator Obama will be speaking for the Democrats,” she replied.
The Republicans gulped hard. Their counterparts had coordinated. Bush turned to Obama, three seats to his left, and gave him the floor. What followed, according to six Republicans in the room, was a flawless diagnosis of the moment—the policy failures responsible, the solutions at hand, the political complexities of passing TARP through a discordant Congress.
Before he finished, Obama made sure to emphasize that a bipartisan agreement had been within reach before McCain called this meeting. That wasn’t entirely true, but it was brilliant gamesmanship: If McCain hoped to be credited with saving the day by putting politics aside, Obama’s counternarrative was that McCain’s actions had actually jeopardized the negotiations at a moment of maximum delicacy.
“Well,” Bush said, turning to McCain, “it’s only fair that I call on you next.”
McCain shook his head. “I’ll wait my turn.”
Republicans in the room were mortified. Boehner, now regretting having told McCain to say as little as possible, jumped in. He explained his members’ qualms and suggested that tweaks would be necessary to deliver a respectable chunk of them. The room began to buzz with side conversations, talk of whipping votes and calling hearings and changing legislative text. Amid the chaotic cross talk, Obama finally raised his voice. “I’d like to hear what Senator McCain has to say.”
The table fell silent. Everyone turned toward the GOP nominee. Clearing his throat and sizing up a single index card, McCain delivered a few boilerplate talking points about Republicans’ reasonable concerns with the plan and his hope that a bipartisan consensus would emerge. Reid rolled his eyes, while Obama let escape an audible half laugh, half sigh.
“It was totally embarrassing,” Boehner recalls of McCain’s commentary. “He was unprepared. He had no message. He knew, at that point, he was going to lose.”
As if things couldn’t get uglier, Spencer Bachus, the ranking member on the House Financial Services Committee, seized the moment to boast that Republicans had incorporated strong taxpayer protections into Paulson’s proposal. This infuriated Pelosi, who snapped back that Democrats had insisted on such provisions. Chaos engulfed the room once more, with its screaming matches heard down the hallway.
“Well,” Bush said, pushing his chair away from the table, “I’ve clearly lost control of this meeting.”
THINGS WORSENED IN A HURRY. DESPITE MCCAIN’S TEPID ENDORSEMENT of TARP during the next day’s presidential debate, Republicans led the charge in routing the bill when it came to the House floor the following week. The total was 205 yeas and 228 nays; among Republicans, it was 65 in favor and 133 opposed.
As the clerk tallied the votes, GOP congressman Fred Upton of Michigan stood in the back of the chamber, phone to his ear, announcing to colleagues that the Dow Jones Industrial Average was plummeting. “Two hundred points . . . three hundred points . . . five hundred points . . . seven hundred points.”
Boehner, watching the markets on a television in the cloakroom, said a prayer. McHenry, the feisty young conservative who’d voted against the bill, approached Upton and felt a wave of nausea. “I was a hard-core no,” he says, “but as I listened to Fred, this sinking feeling came over me.”
Back at the White House, Bush looked for the positives. “Hopefully,” he told a pair of staffers, “this will scare some people straight.”
It did and it didn’t. A number of on-the-fence Republicans were sufficiently spooked to back the next version of the bill, no matter what it included. But for many on the right, the vote was cathartic. After failing for eight years to break the GOP’s addiction to big government, conservatives had defied their party’s president and its congressional leadership on the most urgent legislation in modern American history.
It had been a long time coming. Jim DeMint, the conservative South Carolina senator, had pledged to be a “team player” when he jumped from the House to the Senate, working on behalf of the party’s senatorial committee to raise money for upcoming elections. But by the summer of 2008, his feuds with the establishment having escalated, DeMint broke away and started his own group, the Senate Conservatives Fund, meant to recruit and support conservatives who could restore the party’s credibility. “The basic Republican platform of limited government was not evident in any of the things we were doing,” DeMint recalls. “It just felt like Republicans had nothing to run on anymore.”
A parallel sense of revolution was percolating in the lower chamber. As the White House scrambled to make recommended changes to the package, with Bolten taking over for Paulson as the point man on passing TARP, House conservatives called an emergency meeting in the Budget Committee’s hearing room. On one side, Wisconsin congressman Paul Ryan and another conservative favorite, Kevin Brady of Texas, implored their colleagues to reconsider. They argued that $700 billion was nothing compared to the cleanup that would be necessary if hundreds of thousands of people lost their jobs overnight.
But Ryan and Brady were outnumbered. A murderer’s row of House conservatives—Mike Pence of Indiana, Jeff Flake of Arizona, Jim Jordan of Ohio, and Jeb Hensarling of Texas—argued that free-market principles meant nothing if they could be jettisoned at the first sign of crisis. “The question is, are we Republicans or are we conservatives?” Hensarling asked the group.
“We’re Americans,” Ryan replied angrily, “And if we don’t do something, this economy is going to crash.” In truth, Ryan feared not just the crash itself. If Democrats wiped out Republicans that November, with the economy in ruins, he warned his comrades, “this will be FDR on steroids. It’ll be another New Deal, run through Alinsky in Chicago,” he said, referring to the legendary community organizer and left-wing boogeyman Saul Alinsky.
Ultimately, a revised bill passed both chambers a few days later and was signed into law. The bleeding stopped. The financial sector steadied. The program, by any objective metric, worked. But the political repercussions suggested otherwise. Institutional mistrust and class divisions were exploding in real time; Republicans who backed TARP would be punished, while those who rejected it benefited.
“Not enough of our members bought into the gravity of the situation—and they were rewarded for not buying into it,” says Eric Cantor, the House GOP’s chief deputy whip, who struggled to secure the votes needed to pass TARP. “That mentality would come back to haunt us.”