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Subprime Freeze Plan: Will "Politics" Play Out For GOP?

Today we saw a fine display of presidential leadership on an economic problem--the kind we would have expected from President Bill Clinton, not President George W. Bush. Yes, the administration is avoiding the "b" word, as in "bailout." And yes, in theory the new mortgage terms for homeowners facing upward resets represent a "voluntary" agreement by their creditors.

But make no mistake: this deal represents a decision by a Republican administration NOT to let the market work its will.

The deal may be justified in the name of protecting the broader economy from a worsening housing crisis at a time when the threat of recession has markedly risen. If it works, it could help the president's woeful approval rating and lighten one more load that the Republican presidential field would rather not carry next year.

But the Bush-Paulson plan may also represent a floor, rather than a ceiling, in efforts to shield homeowners as 2008 campaign pressures intensify. And if that results in placing taxpayer money on the bailout table more than it is already, that could damage the GOP's attempts to rebrand itself as the party of fiscal discipline.

Given the circumstances, this may prove a risk worth taking for the White House. But it is a risk nevertheless.

Questions? Comments? Write to politicalcapital@cnbc.com.