Game Change_ Obama And The Clintons, McCain And Palin, And The Race Of A Lifetime Part 20

Obama thought the campaign needed to be more forceful and pointed in offering a contrast with McCain on the economy, and s.h.i.+ft the focus away from Palin. Larry Grisolano had come to the meeting pus.h.i.+ng a proposal: two-minute TV ads with Obama addressing the camera directly, laying out his economic agenda. Obama immediately approved it.

The American economy had been in recession since the end of 2007, driven there by the collapse of the mid-decade housing bubble and the subprime mortgage market. By September, the financial system had spiraled into an ever-deepening crisis, as one venerable inst.i.tution after another buckled under crus.h.i.+ng losses. The investment bank Bear Stearns had gone belly up in March. Merrill Lynch and the insurance t.i.tan AIG were imploding. The federal government had just seized control of the foundering mortgage giants Fannie Mae and Freddie Mac. And now Lehman Brothers, one of Wall Street's most storied firms, was on the brink of bankruptcy.

Financial economics was hardly an area of expertise for Obama, nor had he said much about the unfolding crisis during the campaign. But behind the scenes, he was building relations.h.i.+ps with a handful of influential financial figures: former Federal Reserve chairman Paul Volcker, former SEC chairman William Donaldson, and UBS Americas chairman Robert Wolf, who was one of Obama's most prodigious fund-raisers and had become his go-to guy on questions involving the money markets.

Over the weekend of September 13 and 14, Wolf was among a clique of bankers and policy makers, including Treasury Secretary Hank Paulson, locked in a marathon meeting at the New York Fed, wrestling with the fate of Lehman. Every so often, Wolf would step out and phone Obama with status reports. Obama was also in touch with Paulson, to whom he'd started to reach out as the crisis worsened. By Sunday, the picture that Wolf and Paulson were painting wasn't pretty. Lehman was likely to go under the next morning, with potentially calamitous fallout on Wall Street and stock markets around the world.

At the meeting in Axelrod's office, Obama revealed nothing specific about what he was hearing. But he told the room that an event might be coming overnight that would change the political landscape dramatically, turning the final two months of the campaign into an all-economics-all-the-time affair.

If this event happens, the country may be in for a bad stretch, he said. We're going to have to deal with it in some way, because the impact could be devastating. I told Paulson that we'd be cooperative and try to help out the administration. We're not going to mess around playing politics. In any case, the right politics here, I think, is to behave responsibly.

Obama knew that economic issues favored the Democratic side in the campaign. But these external forces were too unpredictable for comfort-especially with the race so close and the Palin surge still in effect. Obama's confidence wasn't shaken, but his voice betrayed concern. "It's a very volatile situation," he said. "We could still lose this thing."

THE NEXT MORNING, Lehman announced it was seeking Chapter 11 protection, after the government declined to intercede to save the firm. The filing set in motion the largest bankruptcy in American history. It triggered a financial panic that would provide Obama and McCain with a real-time test of political temperament, skill, and leaders.h.i.+p. And it marked the start of an extraordinary ten-day period that would more or less decide the election.

McCain greeted the day of Lehman's demise at a rally in Jacksonville, Florida. The Dow was already plunging its way toward a five-hundred-point decline between the opening and closing bells. "There's been tremendous turmoil in our financial markets and Wall Street, and it is-people are frightened by these events," McCain said. "The fundamentals of our economy are strong, but these are very, very difficult times."

In his maladroit way, McCain was trying to heed the advice of his chief economic adviser, Douglas Holtz-Eakin, who had counseled him not to talk down the economy and a.s.sured him that its underlying strength-its workers, its factories-was intact. McCain, indeed, had uttered the same line before and it had gone unnoticed. But in the context of Lehman, "fundamentals" was a gaffe of historic proportions.

Matters fiscal and monetary were always the weakest policy link for McCain, which he had admitted publicly more than once. Holtz-Eakin begged him to please stop saying that aloud, particularly in light of its truth, but there was no hiding McCain's rudderlessness over the next three days, as he lurched from blunder to blunder.

On Tuesday, McCain declared the financial situation "a total crisis"-an effort to clean up the "fundamentals" mess that instead looked like an abrupt about-face. That same day, he stated his adamant opposition to a proposed federal bailout of AIG; the next morning, after the bailout had been announced, he flipped to reluctantly supporting it. The day after that, he attacked SEC chairman Chris c.o.x, saying, "If I were president today, I would fire him," only to have it pointed out that no president, real or hypothetical, has that power. Making an awful week worse, one of McCain's main economic surrogates, former Hewlett-Packard CEO Carly Fiorina, went on MSNBC and observed, "I don't think John McCain could run a major corporation." (With that, Fiorina provoked an unnamed McCain adviser to give to CNN.com one of the priceless blind quotes of 2008: "Carly will now disappear.") The Obamans could barely contain their glee. Their boss's reaction s.h.i.+fted quickly from incredulity to disdain. When he first heard about "fundamentals," Obama said to Axelrod, "Why did he say that that?" Three days later, after the Chris c.o.x episode, a friend emailed Obama asking what he thought explained McCain's wild swings and oscillations.

"No f.u.c.king discipline," Obama replied.

As McCain b.u.mbled publicly, Obama was privately conducting for himself what amounted to an on-the-fly series of postgraduate seminars, holding lengthy conference calls night and day with his party's brainiest economic savants. Many of the people to whom Obama turned were Clinton veterans: former treasury secretaries Bob Rubin and Larry Summers, former Council of Economic Advisers chief Laura Tyson. Obama also turned to Clinton himself, calling the former president several times, soliciting his advice, impressing him (for the first time, really) with his approach to the crisis.

Obama was talking regularly with Fed chair Ben Bernanke and daily, sometimes more often, with Paulson. The treasury secretary was astonished by the candidate's level of engagement. On one occasion, Obama kept his plane on the tarmac for a half hour after the final event of his day, with a long flight ahead of him, so he could finish a conversation with Paulson. On another, Obama called Paulson late at night at home and spent two hours discussing the intricate details of regulatory reform. As much as the substantiveness of the discussions struck Paulson, so did their sobriety and maturity. I'll be there publicly for you at any time, Obama told him. I'm going to be president, and I don't want to inherit a financial system that's collapsed.

McCain was in communication with Bernanke and Paulson, too, but to less useful effect. In one exchange with the Fed chairman, McCain compared the causes of the crisis to some recent management troubles at Home Depot. It's kind of like that, isn't it? he asked Bernanke. No, it's not, a flabbergasted Bernanke replied.

When Paulson tried to get McCain on the phone urgently, it would often take a day for his messages to be returned, and even then, it might be Lindsey Graham on the other end of the line instead of the candidate. At one point, McCain insisted on putting Palin on a call with Paulson-whereupon she proceeded to spout an a.s.sortment of populist, anti-Wall Street bromides that the secretary, a former CEO of Goldman Sachs, found weirdly off-key and completely pointless.

In the wake of Lehman and AIG, the credit markets were frozen shut and the capital markets in disarray. Paulson and Bernanke convinced Bush that a gargantuan bailout fund was necessary to stave off disaster. The administration, in turn, gave Paulson the lead in devising and selling the idea to Congress. It had little choice. The White House had no credibility on the economy, no competence to fas.h.i.+on complex financial transactions, and no ability to deal with the Democrats who controlled Capitol Hill. Paulson, who had spent much of his time in office reaching out across the partisan aisle, had each of those virtues. Bush and his people viewed Paulson, said one, as "our Petraeus on the economy."

On September 19, Paulson and Bernanke held an emergency meeting in Speaker Nancy Pelosi's office with a bipartisan clutch of congressional leaders. Paulson argued that, without quick and momentous action, economic Armageddon would ensue; Bernanke was visibly shaking, his voice trembling when he spoke.

The leaders.h.i.+p agreed to move rapidly on a bailout bill. Two days later, Paulson presented his proposal to Congress: a three-page request for $700 billion with essentially no strings attached.

Both parties recoiled from the plan, but their respective leaders began trying to build a workable bill around it. Pelosi made it clear that House Democrats wouldn't support the bill without a substantial number of Republican votes, to protect the Democrats if public opinion turned against it. John Boehner, the House minority leader, was on board, but after a meeting of the House Republicans on Tuesday, September 23, it was evident to Boehner that there was no support among his people for anything that resembled the Paulson plan. The next day, the point was reinforced when, in a private meeting, House Republicans hooted down d.i.c.k Cheney, who had come to the Hill to sell the bill.

As the nature and dimensions of the dilemma became stark, all eyes in the capital s.h.i.+fted to McCain. The new conventional wisdom was that if the Republican nominee supported the bill, his party would rally around him and it would pa.s.s. If he didn't, the bill was doomed. Democrats said so. Republicans said so. The media said so. The question was what McCain was thinking. And for the moment, he wasn't saying.

MCCAIN WAS TWITCHY THAT Wednesday morning as he and his senior lieutenants filed into his suite at the Hilton in Midtown Manhattan. McCain had a jam-packed schedule in New York for the next twenty-four hours: debate prep, an appearance on the Late Show with David Letterman Late Show with David Letterman, a speech at the annual meeting of the Clinton Global Initiative. But McCain was fixated on other things. Obama had phoned him an hour earlier; he'd missed the call, had no idea what it was about, and that unsettled him. And then there was the financial crisis, which he was sure would be the death of his campaign.

Earlier that morning, McCain had met with thirteen Republican CEOs and Wall Street tyc.o.o.ns-including Steve Schwarzman of the Blackstone Group, Henry Kravis of KKR, John Thain of Merrill Lynch, and Jimmy Lee of JPMorgan Chase-who were, at least nominally, economic advisers to his campaign. Almost to a person, their view of the severity of the crisis was identical to Paulson's. And despite their free-market pedigrees, so was their conviction that a ma.s.sive government intervention was required, and p.r.o.nto, to keep the world from self-immolating.

Up in the suite, the fog of pessimism, both economic and political, was thick as porridge. For the next several hours, McCain and his advisers grappled with how to respond to the Paulson plan and to the crisis more broadly. In other circ.u.mstances, a ma.s.sive federal bailout bill would be the kind of thing McCain would oppose on instinct and on principle; and he knew that many gra.s.sroots Republicans were against it.

Yet from the rambling, chaotic conversation, agreement emerged on three interlocking points that suggested a different course. First, if what they'd just heard from the financial hot shots was to be believed, the risk of an imminent global meltdown unless the government acted was high. Second, the Paulson plan didn't have the votes to pa.s.s. And third, if the bill went down and the economy cratered, Republicans-and McCain in particular-would be blamed and the election over. "Checkmate," said Schmidt.

Presidential campaigns are routinely consumed with faux existential crises, but this was a real one. Casting about for salvation, McCain briefly latched on to the idea of joining forces with Senator Clinton on a piece of legislation she'd introduced to ameliorate the epidemic of foreclosures that were plaguing the housing market. Impulsively, McCain grabbed his cell phone and called her; two minutes later he hung up and told the group, "She doesn't want to do it."

To Schmidt, Davis, and Salter, there seemed only one plausible route to survival: McCain had to fly to Was.h.i.+ngton and st.i.tch together a pa.s.sable bill. Schmidt pointed out that Harry Reid had been quoted the previous day saying, "We need the Republican nominee for president to let us know where he stands and what we should do." The ball was being handed to McCain, Schmidt said. He should take it and run for daylight-not only steaming into the capital to save capitalism, but suspending his campaign, pulling his ads from the air, and calling for the first debate to be postponed until an agreement on the bailout had been brokered.

"It's a big risk," McCain mused. "It's a big gamble." But gradually he warmed to the notion. McCain's instinct when he saw a problem was to charge straight at it and try to solve it. He started thinking, I can do this. I can cut this deal. I can do this. I can cut this deal.

In the early afternoon, with no final decision made, Team McCain headed to the Morgan Library and Museum on Madison Avenue for McCain's debate prep session. His maiden face-off with Obama was set to take place two days later, but this was to be McCain's first full dress rehearsal. The campaign had built a mock-up stage and had camera crews in place to doc.u.ment the proceedings. Former Ohio congressman Rob Portman was on hand to play Obama.

McCain was grouchy about the prep session from the get-go. When his aides tried to do a formal introduction of the candidates, McCain snapped, "We don't need to worry about that c.r.a.p. It's just bulls.h.i.+t. I'm here at the podium, let's just do the debate."

But they didn't get too far-the interruptions were ceaseless, as McCain's aides scrambled to figure out the details of how the campaign suspension might work. Finally, Schmidt interrupted and told McCain that they needed to decide. Are we doing this? he asked.

Charlie Black and Brett O'Donnell, McCain's debate coach, had doubts about pulling out of the showdown in Oxford. If you say you're not going to do the debate and then end up doing it, they argued, you're going to look like a fool. But McCain brushed them off. Convinced that the gamble was worth it, he was all in.

McCain set off back to the Hilton. In the car he called Bush and informed him of his decision, and asked if the president would host a meeting at the White House for him, Obama, and congressional leaders to discuss the bailout bill. Bush feared such a meeting would inject a destabilizing dose of politics into a fragile situation. He told McCain that his intercession would undercut Paulson and wasn't likely to help solve the problem. After hanging up, Bush instructed his aides, Find out what's going on here. But before they had a chance, McCain was on TV, standing at a lectern at the Hilton, announcing the suspension and calling on Bush to convene a conclave.

McCain also phoned Obama before making his announcement, finally returning his rival's call from six hours earlier. Obama, in Florida doing his own debate prep, told McCain he thought that, in the spirit of bipartisans.h.i.+p, the two of them should release a joint statement of principles concerning the bailout. McCain replied that they should go further: get off the campaign trail and head to Was.h.i.+ngton to mediate. Obama was noncommittal, but believed that McCain had agreed to the joint statement. A few minutes later, he learned otherwise when McCain popped up on TV. "Man, that was quick," Obama said to Axelrod in disbelief.

McCain had one more crucial call to place, to David Letterman. McCain had been on the Late Show Late Show a dozen times. He considered Dave a pal. But, though McCain was staying overnight in New York to keep his commitment to Bill Clinton's CGI, he decided it would be in poor taste to be yukking it up in the midst of a crisis. Letterman did not take the news of the last-minute cancellation well. "He's p.i.s.sed," McCain told his aides. "We'll make up." a dozen times. He considered Dave a pal. But, though McCain was staying overnight in New York to keep his commitment to Bill Clinton's CGI, he decided it would be in poor taste to be yukking it up in the midst of a crisis. Letterman did not take the news of the last-minute cancellation well. "He's p.i.s.sed," McCain told his aides. "We'll make up."

By the late afternoon, McCain finally got some good news. Bush had agreed to host the meeting. The president called Obama to extend an invitation for the following day. Obama sensed reluctance in Bush's voice, but, like the president, he felt he had no real choice but to accede to McCain's wishes.

The news of McCain's suspension drew gales of derision from the press. No one was willing to give him the slightest benefit of the doubt-as McCain and his people felt the media surely would have lent Obama-that his motivations were anything less than craven. Pundits said he was using the economic meltdown as an excuse to delay debating Obama. Democrats were instantaneous in criticizing McCain for disrupting the negotiations over the bill. Reid, who a day earlier had called for McCain to make his voice heard on the financial rescue, issued a statement (which he read by phone to McCain) that said, "We need leaders.h.i.+p; not a campaign photo op."

McCainworld had a.s.sumed that the suspension would be viewed as an authentic, characteristic act of putting country first. But after "Celeb," the selection of Palin, and lipstick-on-a-pig, combined with the pratfalls of the week of the fifteenth, McCain was now seen as a typical, and faintly desperate, politician-and his campaign a campaign of stunts. The return to Was.h.i.+ngton might have escaped ridicule. The combination of the suspension and the move to postpone the debate was a gimmick too far.

The weasely image of McCain was reinforced that night, when Letterman exacted his revenge. In the midst of acidly mocking McCain, the host discovered that he was still in New York-not racing to a plane, but preparing for an interview with CBS News's Katie Couric. Tapping into a live feed of McCain having his makeup applied on set, Letterman said, "Hey, John, I got a question. You need a ride to the airport?"

AS ANY GOOD STUNTMAN will attest, it's all in the execution-and in staging his return to Was.h.i.+ngton on September 25, McCain left a great deal to be desired. There was no careful coordination with House Republicans or the White House. There was no media strategy, no plan for a press conference. Nothing. McCain just showed up in his Senate office that morning and said, Okay, let's see what I can do to get something moving here.

The optics of the day were especially poorly managed. A series of meetings was hastily arranged, but they were private; so rather than images of McCain conferring with conservatives, there were shots of him wandering the halls of Congress, as he moved from room to room, looking like a gypsy. He showed up in Boehner's office, where a gathering was already under way with a handful of Republican House leaders. After listening to two and a half minutes of discussion about their concerns regarding the bill, McCain said he was on their side if it would get a deal done. Boehner and his colleagues were happy to have an ally, but they were also bemused. If House Republicans had been asked to vote for their least favorite senator (in either party), McCain would likely have won in a landslide; and he in turn had always considered them a bunch of yahoos. McCain had only just shown up and knew next to nothing about the issues in play around the bailout. And he said not a word about how he planned to approach the meeting with the president later that day.

Davis asked Boehner's chief of staff if there was anyone in his office who could staff McCain at the White House; his campaign aides were legally prohibited from doing so. A young aide named Mike Sommers, who had been in the thick of the fight over the Paulson plan, was a.s.signed the task.

Sommers rode with the nominee to the meeting, prepared to provide McCain with more detail on what House Republicans were looking for. McCain, after all, was now their de facto champion-and he was headed for the high-stakes gathering he'd requested. But McCain spent the trip down Pennsylvania Avenue talking on the phone to Cindy. I'm on my way to the White House, he said. What are we doing for dinner tonight?

When they arrived at their destination, McCain and Sommers hopped out of the car beside the West Portico. As they walked toward the door, McCain suddenly stopped and looked at Sommers blankly.

"What do I need to know about this meeting?" he asked.

Obama, meanwhile, had strategized extensively with Reid and Pelosi, who agreed to defer to him. Obama had no agenda to push; he was annoyed at having to be there rather than preparing for the debate. (He'd resolved to show up in Oxford whether McCain did or not.) They're driving this, so let's hear what they have to say They're driving this, so let's hear what they have to say, Obama thought.

Just before the meeting, Bush was briefed by his adviser Ed Gillespie.

"What's McCain going to say?" Bush asked.

"We have no idea," Gillespie said.

The meeting took place in the Cabinet Room. When the Democrats showed up en ma.s.se, Obama worked the room as if he were mayor of the White House, introducing himself and shaking hands with all the staff. McCain stood off to the side and said little.

The nominees and congressional leaders took their places around the oblong mahogany table. After asking Paulson for a rundown of the situation, Bush talked about how the credit market couldn't be fixed until the political market was appeased. The president didn't care what the rescue plan looked like. If Hank says it will work, I'm for it, he said.

"Madame Speaker?" Bush said, turning the floor over by protocol to Pelosi.

"Mr. President, Senator Obama is going to speak for us today," Pelosi replied.

"Harry," Bush said to Reid, "is Senator Obama speaking for the Senate Democrats as well?"

"Yes, Mr. President, he speaks for all of us here today."

Obama took the floor and held forth for five or six minutes. I appreciate the urgency here, he said, and mentioned his regular conversations with Paulson. Obama ticked off four items central to the bill: executive compensation, golden parachutes, oversight, and flexibility. "I think just about everyone has agreed on these," he said, then added a sly dig at the House Republicans. "I understand there are some who may not be as far along as the rest of us.

"We can argue about how we got here, but that's not the issue," Obama went on. "The issue is how to solve the problem."

Boehner spoke next, airing his caucus's complaints with the Paulson plan and putting forward a smaller, less intrusive alternative.

"This is interesting," Reid said, "because John Boehner seemed like he was a socialist last week, and suddenly he's finding free-market principles."

Pelosi and House Financial Services Committee chairman Barney Frank piled on Boehner. "I can't invent votes," Boehner said, defending himself. "I have a problem on my own hands." Others chimed in. The pace was rapid-fire, though the volume was low.

At that point, Obama more or less took over. House and Senate Democrats and Senate Republicans are ready to make this deal, Obama said. We can't be going forward and creating a new one. (One Republican in the room mused silently, If you closed your eyes and changed everyone's voices, you would have thought Obama was the president of the United States If you closed your eyes and changed everyone's voices, you would have thought Obama was the president of the United States.) The meeting was now more than forty minutes old. McCain had yet to contribute.

"Can I hear from Senator McCain?" Obama asked, as if he really were running the session, although he first went back to Paulson with a question. When Paulson finished, the treasury secretary told McCain that he'd like to hear from him, too.

McCain thanked the president for hosting the gathering, then thanked Paulson. He said the situation was dire. He noted that progress had been made, but that House Republicans had concerns, which he listed. His comments sounded like introductory talking points, presented as if the first forty-five minutes of the meeting hadn't happened.

All h.e.l.l broke loose. Frank, Pelosi, and Republican senators Richard Shelby and Mitch McConnell started loudly squabbling. Frank, agitated, turned on McCain.

"John, what do you think?" Frank asked sharply.

"I think the House Republicans have a right to their position," replied McCain.

"Fine. You agree with that position?"

"No, I just think they have a right to their position."

Bush had heard enough. "You ready to end this?" he said to Reid, who signaled his a.s.sent.

"All right, I think we understand where we are," said Bush. "We have work to do, and all I'm asking you is to make sure we go forward." Placing his hands on the table for emphasis, he stressed how important it was that some kind of deal happen quickly.

"We can't let this sucker fail," Bush said, and, with that, the meeting was over.

Bush was dumbfounded by McCain's behavior. He'd forced Bush to hold a meeting that the president saw as pointless-and then sat there like a b.u.mp on a log. Unconstructive Unconstructive, thought Bush. Unclear. Ineffectual. Unclear. Ineffectual.

McCain told his aides the reason he was silent was that, from the moment the Democrats deferred to Obama, he knew that the meeting would accomplish nothing. Their disruptive behavior at the end had only confirmed his opinion.

To whatever extent McCain's chagrin was sincere, it reflected another bedrock miscalculation in his decision to suspend his campaign. The premise of the strategy was that McCain could return to the capital and play the above-the-fray bipartisan dealmaker. But in any election year, the fray is boundless. The idea that the opposition party would let McCain waltz back into Was.h.i.+ngton and stage-manage a triumph with November 4 only forty days away was folly. Yet in the face of a determined Democratic resistance, McCain had failed even to wire the outcome on the Republican side. By the night of the White House meeting, the costs of those mistakes were apparent on every TV screen in the land, as Democrats l.u.s.tily tore McCain limb from limb and Republicans were mute.

"If you're going to come riding into Was.h.i.+ngton on a white horse to slay a dragon, you better have the dragon tied up and tranquilized and ready to die," a longtime friend of McCain's concluded. "You don't come in and not slay the dragon and walk out with a whimper."

A BEVY OF OBAMANS were waiting in Mississippi, wondering when they might next see their man-and if he was going to end up on stage tangling with McCain or talking to himself. The next morning, less than twelve hours before the debate was scheduled to begin, the answer remained a mystery. And then, just like that, McCain's campaign issued a statement that the candidate was suddenly "optimistic that there has been significant progress towards a bipartisan agreement" and was therefore suspending his suspension. The jousting match was on.

The topic of the first debate was supposed to have been domestic policy, per the decree of the nonpartisan Commission on Presidential Debates. But over the summer, when the two campaigns met to negotiate details, Obama's team, led by Emanuel, had proposed a switcheroo to foreign policy. For press consumption, Axelrod explained that the change reflected Obama's confidence on the topic-and that was half true. The other half, however, was that Obama believed that McCain's foreign-policy strength was vastly overstated. He doesn't know as much as everyone thinks he does, Obama told his advisers. The surge? Check. Wasteful weapons systems? Check. Everything else? Whiff.

Obama's preparation for the debates had been extensive. He was aware that his performances against Clinton had not been among his most s.h.i.+ning moments, and he was still smarting from his one onstage encounter with McCain, in August. Invited to a joint forum on social and religious issues at Rick Warren's Saddleback Church, Obama had prepared little-Prepare? For Pastor Rick? I know this stuff-and been creamed. (His answer that deciding when a fetus was ent.i.tled to human rights was "above my pay grade" was widely ridiculed.) In the past, Axelrod had run Obama's debate prep, and it had been, like the strategist himself, disorganized and loose-limbed. For his debates with McCain, Obama had given authority to veteran Democratic strategists Tom Donilon and Ron Klain and forensics specialist Michael Sheehan, who put him through his paces with repeated dress rehearsals, DVDs of himself to study, and meticulous briefing books.

For McCain, the chaotic session at the Morgan Library was not an aberration. He detested debate prep, resisted it with every fiber of his being. "Not today" was his reflexive response to the suggestion that he practice. He thought he didn't need it, thought he knew the issues, and hated being quizzed. During a rehearsal for the first GOP debate in 2007, O'Donnell pressed him on a question to the point where McCain finally snapped. "John, what is the difference between a gay marriage and a civil union?" O'Donnell asked. McCain replied, "I don't give a f.u.c.k."

When he arrived that morning in Oxford, indeed, McCain had yet to complete a single formal run-through. One hold-up revolved around who would play Obama in mock debates. The campaign had settled on someone it thought would be the ideal stand-in: Michael Steele, the African American former lieutenant governor of Maryland. Not only would Steele be a feisty sparring partner, he could also help McCain become aware of potential racial rhetorical traps. Steele said yes when O'Donnell approached him, and spent all summer gearing up for the task, studying Obama briefing books and watching Obama videos. But McCain stalled, worried that the press would find out he had picked a black Obama placeholder and accuse him of tokenism. After more than a month of paralysis, the idea was sc.r.a.pped and Rob Portman was brought in with just two weeks' notice.

On the afternoon of the debate, McCain was nervous. His advisers took it in stride. Charlie Black believed that if a presidential candidate said he wasn't skittish before his first general election debate, he was lying, was insane, or didn't comprehend the stakes.

Perhaps Black should have added a fourth option-freak of nature-to describe Obama, who was as calm as ever. An hour before the debate, Valerie Jarrett went to his hotel room and knocked on the door; she was a nervous wreck. When Obama appeared, he took a look at her face, put his hand on her shoulder, and said, "Valerie, I got this."

Jarrett headed out to the auditorium, where she met up with Mich.e.l.le, who was a basket case herself. Jarrett told her about her exchange with Barack a few minutes earlier.

"Well, then, I guess he's probably got it," Mich.e.l.le said, smiling.

An audience of more than fifty-three million watched the debate that night. They saw Obama present himself as composed and rea.s.suring. They saw him project an aura of confidence and competence on foreign policy. And they saw him pierce McCain with one poison-tipped sound bite regarding the Republican's record on Iraq: "You said we knew where the weapons of ma.s.s destruction were. You were wrong. You said that we were going to be greeted as liberators. You were wrong. You said that there was no history of violence between s.h.i.+te and Sunni. And you were wrong."

McCain's advisers, worried that his disdain for Obama might show through, had advised their man to look at the audience and not at his opponent. He followed that directive all too well, not making eye contact with Obama all night. He seemed dismissive and cranky and ill at ease. The debate was McCain's chance to redeem himself; instead, he spent ninety minutes reinforcing his weaknesses and doing Obama no damage. He lost every post-debate insta-poll and was pummeled mercilessly by the cable talking heads. "Do you think he was too troll-like tonight?" Chris Matthews asked one of his guests afterward. "Seriously. Do people really want to put up with four years of that? Of [him] sitting there, angrily, grumpily, like a codger?"

THE FOLLOWING MONDAY, SEPTEMBER 29, the Paulson bailout plan was voted down in the House of Representatives, 228 to 205; not a single Republican pulled the lever in its favor. The stock market immediately plunged nearly 800 points. Five days later, Congress finally pa.s.sed a slightly modified, but still $700 billion, version of the bill. But by now, all confidence was gone. The following week, the Dow fell by almost 2,000 points, losing more than 18 percent of its value-the biggest weekly percentage drop in the 112-year history of the Exchange.

McCain and his advisers were right: the collapse of the economy hurt the GOP. But it was the performances of both candidates during those ten September days after the fall of Lehman that mattered most. In a time of turmoil, Obama demonstrated a capacity to withstand pressure and keep his balance. The crisis atmosphere created a setting in which his intellect, self-possession, and unflappability were seen as leaderly qualities, and not as aloofness, arrogance, or bloodlessness, as they had sometimes been regarded in the past. In the Obama campaign's focus groups, doubts about his readiness began to fall away-while at the same time, voters described McCain as unsteady, impulsive, and reckless.

This view was shared by Democrats and Republicans alike, by those watching the crisis unfold from afar and those with a front-row seat. Jim Wilkinson, a longtime Republican operative, served as Paulson's chief of staff during the crisis, and his impression of the candidates could hardly have been clearer. "I'm a pro-life, pro-gun, Texas Republican," said Wilkinson. "I worked all eight years for Bush. I helped sell the Iraq War. I was in the Florida recount. And I wrote a letter to John McCain asking for my five-hundred-dollar contribution back, when he pulled that stunt and came back to D.C. Because it just wasn't what a serious person does." To his amazement, Wilkinson determined that he would be voting for Obama.

Even one of Obama's harshest critics was now writing off McCain. None other than Hillary Clinton was finally convinced that there was no stopping Barack. In the midst of the financial crisis, she said to a friend, "G.o.d wants him to win."

Clinton wasn't alone in the conviction that the outcome of the race was basically settled. But October turned out to hold its own abundance of surprises-shaking the campaigns and appalling or delighting voters, depending on their inclinations. The shocks to come weren't discharged by McCain or Obama, though. Instead, the game changers of the final month were on the undercard.

Chapter Twenty-Two.

Seconds in Command.

SARAH PALIN WAS ALONE in her room at the Millennium Broadway Hotel in New York staring at her index cards. It was September 23, the night before McCain suspended his campaign, and Palin was scheduled to begin a series of interviews the next morning with Katie Couric. Around nine o'clock, Nicolle Wallace arrived to spend some time doing prep. Couric was sure to ask her about the financial crisis, Wallace said, showing Palin a statement that McCain had just released on the subject. "If you internalize this," Wallace explained, "you should be able to field basic questions about the bailout."

Wallace knew Couric well, having worked as a political a.n.a.lyst at CBS between her stints at the White House and the McCain campaign. She shared her insights with Palin on other areas the anchor would almost certainly pursue, such as abortion rights. But Palin, who had spent the day meeting foreign leaders who were in Manhattan for the U.N. General a.s.sembly, was exhausted and distracted. She had a hard time processing the statement on the bailout, and when Wallace tried to raise other topics, Palin would not engage. For three hours, the prep session went nowhere, as Palin kept downs.h.i.+fting into small talk. "What's Katie like?" she asked.

By the eve of the Couric interviews, McCainworld was nursing an array of worries about Palin, from her character to her knowledge level to her focus. With her meteoric rise had come fantastic scrutiny, and although Palin had survived so far, the c.h.i.n.ks in her armor were becoming apparent-especially to those observing her at close range.