The challenge on the economy is greater for McCain than for the presumed Democratic nominee, Barack Obama, whose party base generally favors government intervention in tough times. Surveys show Obama leading when voters are asked who is best able to handle the economy, whereas McCain's strengths are seen as dealing with foreign policy and terrorism.
Obama's economic policy advisor, Jason Furman, said Friday that the senator is "encouraged" by the progress of the housing and Fannie Mae legislation, suggesting that the Democrat was likely to support Paulson's plan.
So far, McCain has been cautious. Asked last week by a CNBC interviewer about the fate of the two companies, McCain said: "We will not allow them to fail."
But the Arizona senator has yet to say whether he would support the Paulson plan in the Senate or to specify what he would demand in return for the federal assistance.
In a statement to The Times, McCain's campaign said the Paulson plan was "consistent with the goal of providing support for a path through the current duress," but that an "essential" element would be "regulatory reforms that impose market discipline and mission focus."
Comments from the campaign seem designed in part to make a case to conservatives that McCain hears their concerns. "It's not appropriate for these institutions to be making money with taxpayer backing, and reforms have been needed for a long time," said McCain's economic advisor, Douglas Holtz-Eakin.
Still, fiscal conservatives said they want to hear more. They also said that McCain could use the debate to burnish his credentials as an enemy of special interests, because Fannie Mae and Freddie Mac are among the biggest spenders on lobbying and political donations.
"This is an opportunity for Sen. McCain to talk about reform, and that's his forte," Rep. Tom Feeney (R-Fla.) said.
But some McCain supporters believe he cannot afford to oppose measures designed to help homeowners and to stave off a market collapse. They think he should support a rescue plan, though one with safeguards to limit executive pay raises and shareholder enrichment on the taxpayer's dime.
"You can talk about smaller government and so forth, but if you find someone lying in a ditch with arterial bleeding, you have to call an ambulance," said former Sen. Warren B. Rudman (R-N.H.), who is advising McCain on economic policy. "If the government doesn't send it, then nobody will."
