Politicians and civic leaders saw an opportunity to extend the goals of Manifest Destiny by using the American occupation of Mexico as a natural step toward annexation.
By the time the Mexican American war ended in late 1847, war aims had shifted and some Americans, particularly those in the Northeast, favored an “All Mexico” proposal that would have seen Mexico absorbed into the United States, much like Texas had been and California soon would be. Ideas of “annexation” gave way to “regeneration.” Bringing Mexico into the Union would lift the Mexican people out of deprivation and tyrannical government. “All Mexico” was favored by leading politicians, newspaper editors, and members of the Polk cabinet.
Add Mexico to the Indemnity
The All Mexico crusade was promulgated with the best of intentions. Historian Frederick Merk writes that, “in the case of Mexico, a people was to be saved from cruel and selfish rulers, a community was to be lifted, and was to have bestowed on it the blessings of American order and peace and freedom.”  Political leaders, mostly Democrats like Stephen A. Douglas and Lewis Cass, who would be the party candidate in the 1848 presidential election, favored the program. Referring to these goals, President Polk, in a diary entry of February 28, 1848, records that the peace treaty sent to the Senate for ratification was in doubt because certain members of the Senate Committee on Foreign Affairs, like Edward Hannegan, were blocking ratification efforts. “Most of the Democratic Senators who will vote against ratification,” Polk writes, “will do so because they desire to secure more territory.”  Hannegan supported “All Mexico.”
Misreading Mexican intentions, the Philadelphia Public Ledger, on November, 1847, postulated that the American occupation of Mexico would be viewed as beneficial by a people who would insist on a longer term relationship. “Thus will annexation be forced upon us as the inevitable result…” Moses Beach, editor of the New York Sun, wrote in October 1847 that “to liberate and ennoble…is our mission.” Many viewed annexation of Mexico as part of Divine Providence, an inevitable consequence of Manifest Destiny. “The final result,” according to Seymour Connor and Odie Faulk, “ …would be a grand United States of North America, embracing both Mexico and Canada.” 
The Role of a Central American Canal
Part of the justification used to annex Mexico as well as lands further south in Central America involved the need for a transoceanic canal. American ownership of these lands would make that task easier. In an autobiographical account, penned in September-October 1859, Stephen Douglas, who had chaired both the House and Senate Committees on Territories, explained his opposition to the Clayton-Bulwer Treaty on the grounds that it would close the doors to any future annexation of Central American lands. Writing in third person, Douglas states, “he would never pledge the faith of the Republic not to do in the future in respect to this continent what our interests and safety might compel us to do.”  Douglas, who responded to the Oregon crisis in the early Polk years by invoking a “higher law” in regard to land claims in Canada, supported “All Mexico.”
Ultimately, the perception that Mexico could never fully be absorbed ended the debate. The Treaty of Guadalupe-Hidalgo was ratified and vast new territories completed a nation continent. Notwithstanding the later Gadsden Purchase, there would be no more continental annexations. All further land grabs would be part of future imperialism and the canal would be achieved by supporting a surrogate government in Panama during the Teddy Roosevelt administration.
-  Frederick Merk, Manifest Destiny and Mission in American History (New York: Vintage Books, 1966), p. 121-122.
-  James K. Polk, The Diary of a President 1845-1849, Allan Nevins, Ed. (New York: Longmans, Green, and Co., 1952) p.312.
-  Seymour V. Connor and Odie B. Faulk, North America Divided: The Mexican War, 1846-1848 (New York: Oxford University Press, 1971) p.165.
-  The Letters of Stephen A. Douglas, Robert W. Johannsen, Ed. (Ubrana: University of Illinois Press, 1961) p.157.