Morning Brief: Day of rage on Capitol Hill

Top Story

Chip Somodevilla/Getty Images

The Bush administration’s $700 billion bailout proposal looks to be on life support after a tough day on Capitol Hill Tuesday.

Sitting for a grueling, five-hour session before the Senate Banking Committee, U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke faced a torrent of skepticism and second-guessing from outraged senators in both parties. In the House, Vice President Dick Cheney tried to convince Republican leaders to support the bailout in a meeting described as “a bloodbath” to reporters.

As David Leonhardt notes, “most members of Congress have no expertise in the byzantine details of mortgage finance” — yet that didn’t stop them from savaging Paulson and Bernanke yesterday while proposing measures to assist homeowners and limit executive pay.

“I think we’re going down the road of France now,” ranking Banking Committee member Sen. Richard Shelby complained Tuesday, “in all due respect for my French friends.” Democrats are said to be indicating that the Republican nominee, Sen. John McCain, holds the key swing vote. If he votes against the bailout, no deal.

Meanwhile, news that billionaire investor Warren Buffett is taking a $5 billion stake in Goldman Sachs appeared to calm many nerves on Wall Street and in markets around the world — at least for the time being.

Decision ’08

Democratic Sen. Barack Obama takes a nine-point lead among likely voters in the new Washington Post-ABC News national poll. Raw data here.

Obama admitted yesterday that the bailout may force him to “phase in” some of his ambitious spending plan if elected.

News organizations were allowed to observe Alaska Gov. Sarah Palin’s “meetings” with Afghan Pres. Hamid Karzai and Colombian Pres. Alvaro Uribe for 29 and 15-20 seconds, respectively.

Americas

Brazil is becoming an oil powerhouse, potentially.

Hurricane season has undermined support for the U.S. embargo of Cuba.

Democrats have decided to let the ban on new offshore drilling quietly expire.

The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers, and AIG for possible fraud, CNN reports.

Asia

North Korea has apparently removed the IAEA’s seals on its nuclear reactor.

The Bush administration has “no plans to declassify” a reportedly “grim” National Intelligence Estimate on Afghanistan before the November election, according to ABC News.

It appears that a U.S. drone has crashed in Pakistan, where Defense Secretary Robert Gates insists the United States is acting within international law.

Middle East and Africa

In a speech peppered with anti-Semitic rants, Iranian Pres. Mahmoud Ahmadinejad asserted at the U.N. General Assembly that “the American empire” is “reaching the end of its road.”

Islamist insurgents have begun attacking African Union peacekeepers in Somalia.

The resignation of respected South African Finance Minister Trevor Manuel spooked investors, sending the country’s currency downward.

Europe

Finland’s prime minister is calling for stricter gun laws after a crazed gunman killed 10 people at a vocational college Tuesday. The Scandinavian country has one of the highest rates of gun ownership in the world.

British PM Gordon Brown appears to have bought himself some breathing room with yesterday’s speech to the Labor Party conference. A cabinet reshuffle is reportedly in the works.

Business confidence is slumping in France and Germany.

Today’s Agenda

President Bush discusses free trade with fellow Western leaders in New York before heading to Florida for a fundraising event.

McCain and Palin are both in New York today. Palin meets with the presidents of Ukraine, Georgia, and Iraq, and the prime minister of India. McCain will reportedly be present for all but the meeting with Iraqi Pres. Jalal Talabani.

Obama campaigns in Florida while his running mate, Sen. Joe Biden, stumps in Ohio and Indiana.

Bernanke and Paulson do “round two” on the financial crisis in front of the House Financial Services Committee at 2:30 p.m. ET. Bernanke will also address the Joint Economic Committee at 10 a.m., though he’ll be discussing the economy as a whole.