Can't Anybody Play This Game? The McCain Campaign Defies Belief

You know, we have llike seen this before. On health care:

• McCain started with a tax credit that was equal in aggregate to the additional tax he levied on employer-sponsored health benefits in the first year--in later years the credit became much smaller than the tax.
• Then it was like ooops, that's not popular. We know--we never intended to subject employer-sponsored benefits to the FICA tax, only to the income tax.
• Then it was like ooops, now we're scared that the plan is fiscally irresponsible and will raise the deficit. We know--we will cut Medicare!
• Then it was like ooops, we have to carry Floria. We know--have Sarah Palin say that McCain will not cut but will protect your entitlements.

Can't anybody play this game? If we lose the election to these clowns, I am going to be really embarrassed. It seems as though nothing is competently staffed out--as if nobody in the McCain campaign cares about actually having policy proposals, but only about having something incoherent that an ignorant and lazy reporter can be deceived into thinking is a policy proposal.

The latest installment of this: after demonstrating John McCain's bad character and unfitness for the presidency trying to "turn the page" from issues like the financial crisis that people care about to "character," John McCain further demonstrates his bad character and unfitness for the presidency by trying to turn the page back. And look what we have:

Last night McCain said that he had a housing plan--and that "it's my proposal, it's not Sen. Obama's proposal, it's not President Bush's proposal. But I know how to get America working again, restore our economy and take care of working Americans...":

Transcript of second McCain, Obama debate - CNN.com: You know that home values of retirees continues to decline and people are no longer able to afford their mortgage payments. As president of the United States, Alan, I would order the secretary of the treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes -- at the diminished value of those homes and let people be able to make those -- be able to make those payments and stay in their homes. Is it expensive? Yes. But we all know, my friends, until we stabilize home values in America, we're never going to start turning around and creating jobs and fixing our economy. And we've got to give some trust and confidence back to America. I know how the do that, my friends. And it's my proposal, it's not Sen. Obama's proposal, it's not President Bush's proposal. But I know how to get America working again, restore our economy and take care of working Americans. Thank you.

But it soon develops that much of Senator McCain's proposal is not his but Barney Frank's, and that the differences make it not a homeowner relief bill but an imprudent banker profit and rescue bill:

Victoria McGrane: Details provided to reporters by senior adviser Doug Holtz-Eakin Wednesday morning make one thing clear: Taxpayers would directly pick up the tab for the difference in cost between a homeowner’s old, too-expensive mortgage and the cheaper one provided by the government... something that congressional lawmakers, led by House Financial Services Chairman Barney Frank (D-Mass.) specifically avoided when they crafted their own landmark housing bill... which Holtz-Eakin says provides at least part of the authority McCain would need to carry out his plan.... “Clearly we face the trade off that we would in fact be taking the negative equity position and putting it on the taxpayers books instead of putting it on the private lenders books or the homeowners books,” Holtz-Eakin told Politico. “We think the balance of risk has shifted to the point where this is the way to go”...

And the bill as described on McCain's website is still different:

Ginger Yellow: Holtz-Eakin's description may be the true one (it's the only way this makes sense as a financial rescue package rather than a homeowner bailout), but it flatly contradicts the description on McCain's website, which says "For those that cannot make payments, mortgages must be re-structured to put losses on the books and put homeowners in manageable mortgages. Lenders in these cases must recognize the loss that they’ve already suffered." Now, given that the plan presented on McCain's website is utterly incoherent and probably illegal, I'm willing to give Holtz-Eakin the benefit of the doubt. But we have a right to know whether McCain's website or his economic adviser is lying.

But by the time I got to the website, it read differently:

JohnMcCain.com - McCain-Palin 2008: For those that cannot make payments, mortgages must be re-structured to put losses on the books and put homeowners in manageable mortgages. Lenders in these cases must recognize the loss that they’ve already suffered.

Apparently the schmuck who was assigned the job of writing up the web description did not believe the plan could possibly be what he was told it was.

Jackie Calmes has more. She does not sound happy:

Taxpayers, Not Lenders, Would Bear Costs of McCain’s Mortgage Proposal /a>: The campaign of Mr. McCain’s Democratic rival... condemned the proposal Wednesday. It said in a statement, “The biggest beneficiaries of this plan will be the same financial institutions that got us into this mess, some of whom even committed fraud.” Beyond the costs, the proposal could encounter a backlash from voters, especially those who have had to work hard and sacrifice to keep current on their mortgage payments and who might resent bailing out fellow homeowners who got themselves into financial trouble.

Mr. Holtz-Eakin suggested that “the taxpayers’ contribution” would be the price of getting the quickest possible relief to homeowners.... Though Mr. Holtz-Eakin spoke of the urgency for action, he said Mr. McCain did not propose the idea as part of the recent bailout negotiations between Congress and the White House. So it would not begin until after Mr. McCain, if elected, takes office in January and issues an executive order. The White House and the Treasury Department declined to comment on the McCain proposal.... Mr. Holtz-Eakin... said the process of applying for a replacement mortgage would be “very simple,” though clearly administering such a program would not be.... If [homeowners] passed a credit check, they would qualify for a Federal Housing Administration loan based on the reduced value of the homes, with lower principal and a lower interest rate. The government would pay off the original loan, Mr. Holtz-Eakin said. That would take the bad debt off the books of the institutions...

And let's not get into the confusion between the $300 billion commitment for the Frank plan (estimated to cost $5 billion) and the $300 billion cost for the McCain plan that we find in:

JohnMcCain.com - McCain-Palin 2008: Homeownership Resurgence Plan: The direct cost of this plan would be roughly $300 billion because the purchase of mortgages would relieve homeowners of “negative equity” in some homes...

And let's not get into the massive confusion about the powers of the president to order the spending of money found in McCain's:

Transcript of second McCain, Obama debate - CNN.com: As president of the United States, Alan, I would order the secretary of the treasury to immediately buy up the bad home loan mortgages...

On matters like these, presidents don't order treasury secretaries, they ask congress to authorize.

---

JohnMcCain.com - McCain-Palin 2008: Homeownership Resurgence Plan:

John McCain will direct his Treasury Secretary to implement an American Homeownership Resurgence Plan (McCain Resurgence Plan) to keep families in their homes, avoid foreclosures, save failing neighborhoods, stabilize the housing market and attack the roots of our financial crisis. America’s families are bearing a heavy burden from falling housing prices, mortgage delinquencies, foreclosures, and a weak economy. It is important that those families who have worked hard enough to finance homeownership not have that dream crushed under the weight of the wrong mortgage. The existing debts are too large compared to the value of housing. For those that cannot make payments, mortgages must be re-structured to put losses on the books and put homeowners in manageable mortgages.

The McCain Resurgence Plan would purchase mortgages directly from homeowners and mortgage servicers, and replace them with manageable, fixed-rate mortgages that will keep families in their homes. By purchasing the existing, failing mortgages the McCain resurgence plan will eliminate uncertainty over defaults, support the value of mortgage-backed derivatives and alleviate risks that are freezing financial markets.

The McCain resurgence plan would be available to mortgage holders that:

• Live in the home (primary residence only)
• Can prove their creditworthiness at the time of the original loan (no falsifications and provided a down payment).

The new mortgage would be an FHA-guaranteed fixed-rate mortgage at terms manageable for the homeowner. The direct cost of this plan would be roughly $300 billion because the purchase of mortgages would relieve homeowners of “negative equity” in some homes. Funds provided by Congress in recent financial market stabilization bill can be used for this purpose; indeed by stabilizing mortgages it will likely be possible to avoid some purposes previously assumed needed in that bill.

The plan could be implemented quickly as a result of the authorities provided in the stabilization bill, the recent housing bill, and the U.S. government's conservatorship of Fannie Mae and Freddie Mac. It may be necessary for Congress to raise the overall borrowing limit.

Comments

[christofay]

There is a high corollary between the introduction of Viagra and the disastrous path of the United States. Viagra is the epitome of American exceptionalism thinking.

It seems to me that a means to set our country on a secure path to the future is the banning of taking of Viagra by anyone over 40 years in greater Washington DC. Dole after losing his presidential run, the 2nd or 3rd, was a salesman for Viagra, and his wife Diddy Dole is only 80 or so. At that point in his life Dole should be dealing with mortality, the limits and successes of his life, not thinking of giving the old bird a back rub and doing her. One is a practice of statemanship, the other is envy that he missed the party hearty adolescence (the years between 13 and 45 or 53) that Flybo's Bush and McCain had.

Contra to that, I believe we have to end prohibition now and legalize marijauna. Let us get back to our Declaration of Independence roots.

[Brian Schmidt]

I understand that banks have already been hesitant to renegotiate mortgages, but now with McCain's proposal, they have one more reason not to renegotiate. If they give McCain a 20% chance of being elected, they can weigh that prospect against the benefits to them of striking a deal today with the present homeowner.

And doesn't this directly contradict the Dodd legislation of buying mortgages at a discount? Why would a bank participate in the current program if it thinks it has a reasonable shot for a complete taxpayer subsidy?

McCain is already and presently interfering with the homeowner assistance program.

[joel hanes]

Trying to define McCain's economic policies is a little like nailing Jello to the wall, isn't it?

[Michael Turner]

I love the smell of freshly printed money in the morning. It smells like ... oops: like freshly printed money. Which smells like "inflation", to retirees on fixed incomes. Which scares the living bejesus out of them. So I guess we lose Florida no matter what.

My friends, if you want to know my policy proposal -- not Obama's, not the President's, but MY policy proposal -- concerning the credit crunch, I refer you to my campaign website ... whatever it happens to be saying, today.

I love the smell of freshly displayed pixels in the morning. They smell like ... nothing you can put your finger on.

[Ken Houghton]

Brian Schmidt takes it only one step short of Far Enough: if you can't work on the Homeowner Assistance Program, you can't fix those "dodgy" MBS securities that Cash-N-Carry is going to start buying somewhere around the time McCain dies, leaving Sarah Palin to be elected.

And no one will want them fixed, because if Treasury is going to pay the whole kit and kaboodle, there really IS a lot more value in them than anyone believes. (That it's denominated in a currency whose actual PPP value at that point will be about 25 cents to the Yuan is another issue.)

[pickledshark]

If I were a JPMorgan Chase or Bank of America wouldn't it be in my best interest to continue shaking the government vending machine? Keep holding my breath and hoarding money and say its not safe to lend yet cause they seem to get a treat twice a week of either a competitor takeunder sans any scary liabilities or an interest rate cut or some T-bills in exchange for some bad loans or post it notes? Why not take a few nasty quarters in exchange for a massive bankopoly when this is all over? Hold out to see if mccain gets in for an even sweeter deal. Its worked for them so far.

[Rich S]

After Palin was named VP candidate and clearly not vetted, I said in jest "McCain's top aides are clearly Patriots. They're sacrificing their careers because they recognize how disastrous a McCain Presidency would be."

After the campaign "suspension" and this half-baked proposal, which has the advantage of alienating real conservatives, that line no longer appears to be a joke.

[max]

as if nobody in the McCain campaign cares about actually having policy proposals, but only about having something incoherent that an ignorant and lazy reporter can be deceived into thinking is a policy proposal.

Doesn't that pretty much sum up neo-conservatism?

But it soon develops that much of Senator McCain's proposal is not his but Barney Frank's, and that the differences make it not a homeowner relief bill but an imprudent banker profit and rescue bill:

Was that not Paulson's proposal, except that his proposal involved derivatives instead of mortgages? (Granted, he may yet do the right thing. Still.)

Keep holding my breath and hoarding money and say its not safe to lend yet cause they seem to get a treat twice a week of either a competitor takeunder sans any scary liabilities or an interest rate cut or some T-bills in exchange for some bad loans or post it notes?

What pickledshark said. In the end, we have to take all the biggies.

max
['The retail banks can keep going.']

[bakho]

McCain wants to run the military and doesn't seem to care much about running the other government functions. Even his foreign policy is couched in military terms of threat and bluster with little thought given to diplomacy other than to criticize his opponent for suggesting that we put diplomacy first and negotiate over differences with other countries.

The McCain campaign has been a turbulent flight with campaign hacks and wonks being hired and fired in rapid succession. McCain has allowed the same lobbyists that have been writing Republican sponsored legislation for years to write his campaign proposals. Phil (Enron) Gramm has been on and off board as has Carly (Golden Parachute) Fiorina, Peter Wallison is a self-described "deregulation specialist" of banking and insurance. John Taylor, Mr "Interest rate targeting" (read Stiglitz for a critique). Meg Whitman, Harvard MBA (How well has that worked) with undergrad degree in economics (a little knowledge is a dangerous thing), overpaid former CEO (not CFO) of Ebay and former marketer of Teletubbies. Maybe Whitman could balance the budget by online auction of trinkets from the Smithsonian? Is there anyone in this group that has a commitment to the middle class, higher wages and low unemployment? Gail Wilensky is his health care economist and she is probably connected through veterans health care efforts. see

http://www.muckety.com/Gail-R-Wilensky/5568.muckety

Economics has not been a major concern for McCain (other than military funding) and he has been late to bring policy wonks on board. His lack of seriousness suggests that even if McCain wanted economic reform, he would not have a team in place to carry it out. Obama looks like he has a team in place for outside advice and will bring wholesale change to economic and fiscal policy.

Maybe all the Republican economists are too busy trying to keep the Bush economy afloat through January to help McCain?

[bakho]

MCCAIN CAMPAIGN ECONOMIC POLICY ADVISORS at the start of his campaign in 2007 (See list below)
Note that there are some BIG gaping holes in a number of policy areas. Some have been filled since then. Others have not. Commander-in-Chief is #1 with McCain. Economic policy has been an after thought.

Then during the debates in March, McCain mentions the following people:
"I would rely on the circle that I have developed over many years of people like Jack Kemp, Phil Gramm, Warren Rudman, Pete Peterson and the Concord group." Only Gramm is on the original list. How much is McCain relying on his advisors to develop policy? If her were more engaged with the group below, would the answer have been different?

As the Weekly Standard Rightly Critiqued McCain's debate statement:

Notice that phrase "people like." What makes it odd is that those people aren't like each other at all, at least when it comes to their economic views. A couple of them, if you put them in the same room, would set off an intergalactic explosion like the collision of matter and antimatter.

One adviser, Jack Kemp, is the man who talked Ronald Reagan into embracing supply side economics in the 1970s, which launched the Reagan boom of the 1980s. He's the world's bubbliest advocate of tax cuts, dismissing the traditional Republican fixation on balanced budgets as "root canal" economics. Another adviser, Peter Peterson, is root canal economics. He's a dour Jeremiah who called the Reagan boom a "mad, drunken bash" and thinks steep tax increases on income, gasoline, tobacco, and alcohol, on top of a 5 percent consumption tax, are necessary to put the government's finances in order. He and Rudman run the Concord Coalition, an advocacy group that regards the federal government's budget deficit as the country's foundational economic problem.

Let's stipulate that a president should seek advice from a wide assortment of counselors. And McCain's list may very well reveal a refreshingly nonideological approach to policy making that will prove popular in our post-partisan era of change, the future, causes-greater-than-your-self-interest, hope, and so on. Then again, it might reveal something else. You can't help but wonder: Does McCain know the unbridgeable philosophical differences among the men he mentioned, or are these simply the names that occur to him when someone asks about economic policy? There's good reason to think that in economic matters, John McCain doesn't know his own mind. He's even admitted as much, in off-the-cuff statements that Democrats will be repeating from now till November.

http://www.weeklystandard.com/Content/Public/Articles/000/000/014/751tryie.asp

MCCAIN CAMPAIGN ECONOMIC POLICY ADVISORS in 2007

Grant Aldonas
Managing Director For Split Rock International & Former Under Secretary For International Trade At The U.S. Department Of Commerce

Carlos Bonilla
Senior Vice President For The Washington Group & Former Special Assistant To President George W. Bush

Jeff Brown
Associate Professor Of Finance At The College Of Business, University Of Illinois At Urbana-Champaign

Juan Buttari
Independent Consultant And Researcher In Development Economics

Kathleen Cooper
Dean, College Of Business, University Of North Texas

Steve Davis
CRA International And University Of Chicago Graduate School Of Business

Richard Dekaser
Senior Vice President And Chief Economist, National City Corporation

John Diamond
Edward A. and Hermena Hancock Kelly Fellow in Tax Policy, Baker Institute Of Public Policy, Rice University

Emil Frankel
Transportation Consultant And Former Assistant Secretary For Transportation Policy, Department Of Transportation

Luke Froeb
Professor, Vanderbilt University

Senator Phil Gramm
Former U.S. Senator From Texas

Kevin Hassett
Resident Scholar And Director Of Economic Policy Studies, American Enterprise Institute (AEI)

Greg Jenner
Former Executive Vice President, American Council Of Life Insurers & Acting Assistant Secretary (Tax Policy), U.S. Treasury Department

David John
Senior Research Fellow, Heritage Foundation

Tim Kane
Director, Center for International Trade and Economics, Heritage Foundation

Melissa Kearney
Assistant Professor Of Economics, University Of Maryland

Anne Krueger
Professor At The Johns Hopkins School Of Advanced International Studies (SAIS) & Former First Deputy Managing Director, IMF

Adam Lerrick
Visiting Scholar For The American Enterprise Institute (AEI) And Friends Of Allan H. Meltzer Professor Of Economics For Carnegie Mellon

Phil Levy
Resident Scholar for the American Enterprise Institute (AEI) and Former Senior Economist for Trade on the President's Council of Economic Advisers

Will Melick
Gensemer Associate Professor of Economics, Kenyon College

Michael Moore
Professor Of Economics And International Affairs, George Washington University

Tom Miller
Resident Fellow for American Enterprise Institute (AEI)

Tim Muris
Foundation Professor, George Mason University School Of Law

Gerry Parsky
Senior Economic Advisor

Nancy Pfotenhauer
Former President, Independent Women's Forum

James Rill
Partner, Howrey LLP and Former Assistant Attorney General (Antitrust), U.S. Department of Justice

Kenneth Rogoff
Professor Of Public Policy, Harvard University

Harvey Rosen
Professor Of Economics And Business Policy, Princeton University

John Silvia
Managing Director, Chief Economist, Wachovia Bank

Acquiles Suarez
Vice President For Government Affairs For National Association Of Industrial And Office Properties & Former Special Assistant To The President For Domestic Policy

Dr. John Taylor
Professor Of Economics At Stanford, Senior Fellow At The Hoover Institution & Former Under Secretary Of Treasury

Anthony Villamil
Chief Executive Officer, The Washington Economics Group, Inc. & Former Under Secretary Of Commerce For Economic Affairs

Joseph Wright
Chairman Of The Board For Intelsat

Mark Zandi
Chief Economist For Moody's Economy.Com

James Rill
Antitrust Attorney at Howrey LLP; Former Assistant Attorney General in charge of the U.S. Department of Justice's Antitrust Division

Sean O'Keefe
Former Secretary Of The Navy, NASA Administrator, & Deputy Director Of Office of Management & Budget, The White House

If these people are not actually meeting to plan policy, the result will be an incoherent jumble.

[Robinia]

Do you suppose that he was simply lobbied by banking friends as per the Keating thing, and is putting forward what they write, so that they can continue the looting of the Treasury for a bit longer before the grown-ups require some accountability? Just judging by his record, ya know. Maybe somebody will give he and Cindy a nice vacation out of it after he loses.

[Don the libertarian Democrat]

Douglas Holtz-Eakin Tells The Truth
Well, at least he's honest:

"WASHINGTON — The homeowner assistance plan that Senator John McCain announced without detail in the presidential debate Tuesday night would allow millions of financially stretched Americans to refinance their mortgages with government help, but it would leave taxpayers to cover the losses, rather than the financial institutions that hold the original mortgages.

Mr. McCain said in the debate that the program would be expensive, and on Wednesday his chief economic adviser, Douglas Holtz-Eakin, acknowledged that the liability would be borne directly by taxpayers."

It seems like an awful plan, but Holtz-Eakin stands up for it.

[bakho]

"Do you suppose that he was simply lobbied by banking friends as per the Keating thing, and is putting forward what they write, so that they can continue the looting of the Treasury for a bit longer before the grown-ups require some accountability? "

Well, look at the list of McCain's advisors. Maybe the advisors and lobbyists are the same people?

It is naive to think that a single act will solve the problem (as McCain seems to suggest). On economic policy, McCain is reactive, not proactive.

[Patrick]

All the more reason why Holtz-Eakin should have a hard time finding any kind of work outside conservative think tanks after November.

[Pithlord]

Isn't it obvious that McCain came up with this "plan" on the spur of the moment during the debate? Holtz-Eakin is trying to translate it into policy, which will just piss McCain off.

Obama may not be perfect, but at least he take public policy seriously. McCain is beginning to make Bush look like a thoughtful policy wonk in comparison.

[Measure for Measure]

For what it's worth, I have screenshots of the older and newer McCain Resurgence Plan.

Old:
http://wm54.inbox.com/thumbs/3_130bbb_176a5c4_oJ.jpg.thumb

New:
http://wm54.inbox.com/thumbs/4_130bba_239858e_oJ.jpg.thumb

(I had saved the old one, because it had an oddly unflattering pic of McCain which I figured wouldn't stay up for long. It didn't. http://wm54.inbox.com/thumbs/5_130bb9_449b5579_oJ.jpg.thumb )