The US presidential campaign was rocked by high drama on Friday as Republican White House hopeful John McCain refused to confirm he would take part in the first debate of the elections.

McCain, in one of the biggest gambles of his political career, was instead headed to Congress where legislators were haggling over the terms of a massive financial sector bailout, just hours after the largest bank failure in US history.

The Arizona senator's campaign said "no decisions" had been made on whether he would fly to Oxford, Mississippi to participate in the debate with his Democratic rival Barack Obama.

With less than 40 days to go before the 4 November election, McCain said the debate should be postponed to focus on fighting the financial crisis.

But Obama said he intended to show up at the debate, arguing it was more important than ever for the American people to hear from the two men battling to be the next president.

"We are going to Mississippi," Obama spokesperson Robert Gibbs told MSNBC early on Friday. "Whether or not John McCain shows up, we'll be down there."

A political stunt

"I don't think there is any doubt this was some sort of political stunt" by McCain, Gibbs said.

Debate organizers also pledged to go forward with the debate, saying they would hold a one-man show if necessary.

If McCain does not show, Obama will go up on stage alone and answer questions from moderator Jim Lehrer and members of the audience, organizers said.

McCain suspended his campaign on Wednesday and returned to Washington on Thursday to spur Congress into approving a deal on a 700-billion dollar rescue plan put together by the Republican administration of President George W. Bush.

But then legislators locked in a series of emergency negotiations on Thursday dramatically failed to reach a deal.

Obama was also in Washington on Thursday for the crisis talks called by Bush, which only seemed to muddy the waters, after the bailout deal had seemed within reach.

White House talks stalled

Seven days of Congressional talks stalled at the White House negotiations and then were engulfed in new rancor at dramatic late-night Congress discussions.

McCain stood accused by angry Democrats of sabotaging the deal to salvage his electoral fortunes against Obama, whose poll numbers have risen in recent days on perceptions he would be better at handling an economic crisis.

Obama however pleaded for the frenzy surrounding the White House race to be kept out of the delicate financial talks and said bipartisan cooperation was vital during the crisis.

"We cannot risk an economic catastrophe," he said in a statement overnight. "This is not a Democratic problem or a Republican problem — this is an American problem. Now, we must find an American solution."

Obama has insisted that the debate — the first of three presidential debates scheduled for the remaining weeks of the campaign — go ahead, arguing it was more important than ever for the two contenders to lay out their case.

"One of us is going to be in charge of this mess in four months, and the American people I think have a right and obligation to find out where we want to take the country and what we believe," the Illinois senator said.

Moving forward with debate

The bipartisan Commission on Presidential Debates said it was moving forward with plans for the debate on Friday night at the University of Mississippi despite McCain's threat to skip it unless a deal is reached.

Barney Frank, the Democratic chairperson of the House of Representatives financial services committee, said talks would resume on Friday morning after the session late on Thursday attended by the bailout plan's chief architect, Treasury Secretary Henry Paulson.

At an impromptu press conference, Frank brandished a single sheet of paper that he said was the sum of new Republican proposals introduced at the last minute after a week of sleepless nights in Congress.

Reflecting the unease of many Republicans at the government's unprecedented intrusion into private enterprise, the new plan called for an independent entity to dispose of bad assets, and a cut in capital gains tax.

Democrats were insisting on a plan that gave legislators oversight of the deal's implementation and US taxpayers an equity stake in a bailed-out company and a cap in the pay of executives of rescued firms.

AFP