The Turning Point in McCain's Losing Campaign

The turning point in John McCain's losing campaign for the presidency was when he supported Bush's bailout of Wall Street.

Barack Obama's successful strategy was in making the election a referendum on the policies of the Bush administration. If McCain had opposed the bailout, he would have put Obama in the awkward position of supporting the Bush economic policies and the Wall Street power elite.

Moreover, McCain could have exploited a widespread popular resentment against the transfer of wealth and power to Wall Street. The Republicans and Democrats in the House of Representatives who initially defeated the bailout proposal represented this popular resentment against the claim that the very Wall Street power brokers who had created the financial crisis should be trusted with taxpayer money to solve the crisis. McCain could have led these people against Obama, Bush, and Paulson.

McCain did not do this, because like many Republicans he has been converted to the Herbert Hoover position that the best way to resolve such economic crises is through massive federal interventions into the economy. Hoover's interventions were adopted and extended by FDR, and these policies transformed an economic panic into a prolonged depression. We are now headed in the same direction.

The history of how Hoover's interventionism set the path for FDR's New Deal is covered in Murray Rothbard's book The Great Depression. In the Wall Street Journal, Andrew Wilson has written a short article on this.