Editore"s Note
Tilting at Windmills

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October 9, 2008

MCCAIN HANDS OBAMA A TARGET.... John McCain unveiled his latest in a series of responses to the financial crisis, explaining that he wants the Treasury Department to buy up bad home mortgages. But you know who seems really anxious to talk about McCain's proposal? Barack Obama. He tore into the plan during a speech in Dayton, Ohio.

McCain would have "the government -- meaning taxpayers, meaning you -- buy up bad mortgages," he said. "Taxpayers shouldn't be asked to pick up the tab for the very folks who helped to create this crisis," Obama said. "That's the problem with Sen. McCain's risky idea."

"Banks wouldn't take a loss, but taxpayers would take a loss. It's a plan that would guarantee that you, the American taxpayers, would lose," he said.

"It's not just that Sen. McCain's bailout rewards irresponsible lenders. It's that this bailout would make it more likely that those lenders would keep up their bad behavior."

The plan, Obama said, "punishes taxpayers, rewards banks and won't solve our housing crisis. This is the kind of erratic behavior we've been seeing out of Sen. McCain."

Indeed, the Obama campaign seems very animated about tackling McCain's "plan," hitting the proposal in speeches, in a new television ad, and in a new memo to reporters put together by Jason Furman, the Obama-Biden Economic Policy Director. Put it this way: the Obama campaign seems far more anxious to talk about McCain's idea than the McCain campaign.

On the substance, McCain's $300 billion policy is a bit of a joke, and is getting slammed from the left and the right. No one's taking it seriously, and no one seems to think the idea has any merit.

But from a purely political perspective, this was supposed to be the week in which McCain put Obama back on the defensive, hitting him with a bunch of sleazy attacks and guilt-by-association smears. Except, by unveiling the foolish "homeownership resurgence plan," McCain has offered Obama a chance to stay on the offensive, and hammer McCain on his weakest subject -- the economy.

This afternoon, in Wisconsin, McCain chastised Obama for opposing his plan. "Do you want to help the homeowners of America, or do you want to help Wall Street?" McCain said. "That's the question here."

First, that's an unusually stupid response, given what McCain's policy actually entails. And second, the back and forth keeps the campaign focused on a debate over the economy -- instead of a debate about a '60s-era radical -- which is exactly the opposite of McCain's goal.

Instead of changing the subject, McCain made it easier for Obama to reemphasize the economy and paint McCain as erratic and out of touch. Someone at McCain campaign headquarters really didn't think this through.

Steve Benen 1:55 PM Permalink | Trackbacks | Comments (33)

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this was supposed to be the week in which McCain put Obama back on the offensive

Uh, you mean back on the _defensive_, right?

Yes, I'm an annoying pedant.

Posted by: joel hanes on October 9, 2008 at 2:00 PM | PERMALINK

could it be that obama is trying to swat mccain's plan down because the plan may play well with voters? your other points are valid, but don't overlook this angle.

i do think there's a residual sense of unhappiness at the bailout, that the taxpayers got nothing out of it. on the surface, doesn't mccain's plan at least seem to offer main street something tangible?

Posted by: fred on October 9, 2008 at 2:03 PM | PERMALINK

I like McCain's idea. Even if purchased at face value, the government still gets the money back, just at a lower interest rate that the homeowner can actually pay on. I think. Fred's comment is right though. It does seem like something tangible for main street. Obama should be careful about attacking this particular target.

Posted by: Haik Bedrosian on October 9, 2008 at 2:11 PM | PERMALINK

CNN just showed part of one of McCain's speeches today. At one point he turned toward the for-show crowd that stand behind him on stage. As he addressed them, they all seemed to avert their eyes. It was reminiscent of his aloofness at the debate. Priceless.

Posted by: Danp on October 9, 2008 at 2:15 PM | PERMALINK

OK, so I'm glad that McSame is taking heat for this; every little bit of heat cooks him closer to done.

However, doesn't this idea have some merit? I'm not suggesting that in its current incarnation it's perfect, but the idea that we do something with the 700 billion dollars to more directly assists imperiled homeowners, well, isn't there some good in that idea?

Posted by: Shantyhag on October 9, 2008 at 2:15 PM | PERMALINK

One of the things that's become abundantly clear over the past few months is that John McCain is incapable of thinking strategically, of seeing the big picture.

Before the conventions, McCain dissipated piles of money on negative ads that got him a short-term boost but are now all but forgotten. Obama, by contrast, used the time to build ground organizations all over the country and to lay the basis for a successful fall campaign.

McCain made a harebrained VP pick, plucking the unready Sarah Palin from obscurity with no vetting. Obama chose the relatively dull but extremely strong and seasoned Biden, who will help not only in the campaign but also as a governing partner.

As we go into the home stretch McCain flits from one approach to another, and is surprised that nothing seems to work. For Obama, all the pieces are falling into place just at the right times, and so we see an insurmountable electoral college majority forming even as Obama moves skillfully to exploit McCain's mistakes.

Last of all today we get the news that Obama's transition planning is well underway while McCain superstitiously refuses to even give the matter any serious thought.

It's really a thing of beauty, seeing this triumph of steady rationality over erratic foolishness. If the economy weren't tearing itself to pieces I might even say it's fun to watch.

Posted by: jimBOB on October 9, 2008 at 2:19 PM | PERMALINK

G. Trudeau hit the nail on the head today: the repugnant thing about Bush/Cheney/McCain is their unabashed attitude that profits must remain private, while the greedy among our CEO set have now come begging with hat in hand to socialize their unwarranted risk. Socialism is alive and well for the more affluent among us. -Kevo

Posted by: kevo on October 9, 2008 at 2:21 PM | PERMALINK

I think fred has a point. When McCain proposed his plan Republicans were dismayed, but Independents and Democrats were somewhat supportive. Obama needs to come up with a better plan. Just pointing out the fatal flaw in McCain's idea isn't enough. Folks who have been hit hard need a path to stay in their homes, but paying off bankers who made bad loans is not going to fly with either the right or the left.

By the way, If MeCain persists this issue might drive non-crazy Republicans away from McCain. If he keeps pushing Obama might end up at 15%

Posted by: Ron Byers on October 9, 2008 at 2:23 PM | PERMALINK

"Instead of changing the subject, McCain made it easier for Obama to reemphasize the economy and paint McCain as erratic and out of touch. Someone at McCain campaign headquarters really didn't think this through."
-------
This is surprising given how totally awesome the McCain campaign has been. With steps lie announcing it would like to distract the electorate from serious issues and focus them on Ayers.

Everyone needs to recalibrate their expectations for the McCain campaign, as they have for his choice of VP. As long as they are not slobbering all over themselves, wait, I'll have to give it some thought.

Posted by: TBone on October 9, 2008 at 2:27 PM | PERMALINK

"but the idea that we do something with the 700 billion dollars to more directly assists imperiled homeowners, well, isn't there some good in that idea?" That's not the issue we're talking about -- The issue is whether the taxpayer money will be used to pay for the loans at their inflated paper value (i.e., reward the lenders for their mistakes) or at their current real value (i.e., make the lenders pay for their mistakes). I believe all parties are talking seriously about directly helping the homeowners -- Accusing Obama of not looking to help homeowners is another misleading red herring that avoids the real problem with the McCain proposal (as currently rolled out at 2:30 Eastern Daylight Time -- Just to put my marker down since it might change in the next hour).

Posted by: Michael on October 9, 2008 at 2:27 PM | PERMALINK

By 15% I meant with a 15 point instead of an 11 point lead.

Posted by: Ron Byers on October 9, 2008 at 2:28 PM | PERMALINK

hiak said:

Even if purchased at face value, the government still gets the money back, just at a lower interest rate that the homeowner can actually pay on. I think

Actually no the government does not get its money back. Because McCain's plan allows for the renegotiation of the principle as well as the interest. That means the value of the principle will be written down from say $300k to the current market value of $200k. The ENTRIE $100 loss would be born by the taxpayer. The lending bank would get back 100% of its investment plus the interest/profit (at full face value) thus getting ALL of the profits from their bad bets. While the taxpayers absord ALL the losses.

The other problem with McCain's plan is that the repackaging of the loans into securities and derivatives that have been traded and divided multiple times means that unravelling the ownership question could be nearly impossible. And actually buying them could end up costing even MORE than the face value of the loan.

Obama/Biden support a plan that would allow bankruptcy judges to reset the value of the interest and principle on a loan. This allows people to stay in their houses and puts the losses on the banks where they belong.

Posted by: on October 9, 2008 at 2:33 PM | PERMALINK

I mentioned this at an earlier post, but under present tax law McCain's plan would generate significant taxable income for any homeowner whose mortgage is renegotiated.

For example, if Uncle Sugar pays off a homeowner's $120,000 mortgage and then accepts a new mortgage on the same property for only $100,000, the homeowner will receive a 1099 form reporting $20,000 in taxable income to the IRS. This kind of income is called "forgiveness of indebtedness." The amount of income tax that would be due will depend on the homeowner's other taxable income. Gotcha!

Of course the holder of the original mortgage gets bailed out in full.

It's a bit complicated for a 30-second commercial, but it's another point for Obama to make about this ridiculous McCain proposal.

Posted by: OkieFromMuskogee on October 9, 2008 at 2:33 PM | PERMALINK

The major difference between McCain's proposal and the one Obama had suggested, which is already allowable under the bailout bill from last week, is that McCain wants to pay banks face value for these mortgages, while Obama wants the government to only pay a discounted rate. This would force banks to swallow some of the loss.

Posted by: Danp on October 9, 2008 at 2:33 PM | PERMALINK

McCain's $300 billion policy is a bit of a joke, and is getting slammed from the left and the right.

I finally figured it out.
I can summarize McCain's campaign in three words:

My friends. Wink.

No one can beat that!

Posted by: koreyel on October 9, 2008 at 2:36 PM | PERMALINK

Ron: Obama needs to come up with a better plan.

I agree. One thing that might be included in a better plan would be some kind of regulations on the lending industry to, you know, keep this from happening again and stuff.

Posted by: chrenson on October 9, 2008 at 2:37 PM | PERMALINK

One very strange characteristic of McCain's plans for curing the financial mess, or anything for that matter, is his need to give them a name.

We had some three letter acronym for his original bailout agency, now we have the "HORe" or HomeOwnership Resurgence Plan. We have the "League of Democracies", the "Lexington Project", he probably had a name for his $300 million battery lottery.

Every time he gets all caught up with the name as if that alone is enough to explain it.

And Obama knows why he and Republicans, and politicians in general, do this: bait and switch.

If McCain is elected we can look forward to lots of that, where he just tries to sell the name regardless of the details.

Posted by: tomj on October 9, 2008 at 2:39 PM | PERMALINK

McCain came so close to a worthwhile program, but he missed the bit where the banks have to take part of the bath. It is a good idea to refinance mortgages for fixed rates for current market value, but the banks and investors need to share in the pain, otherwise it is even a more corrupt give-away than Bush/Paulson proposed.

Posted by: freelunch on October 9, 2008 at 2:40 PM | PERMALINK

Wow, some of you haven't been paying attention at all. The McCain Resurgence Plan is pretty weak when compared to the Frank-Dodd bill already on the books.

This is obviously a narrow slice of borrowers — around 400,000, according to most estimates. It excludes people who borrowed to buy investment properties in order to flip them for a profit. It excludes people who are hopelessly in over their heads and simply cannot afford the homes they’re in. And it excludes people who could afford to pay their mortgages if they wanted to but have instead decided to mail the keys to the bank rather than continue making payments on a house that is worth less today than when they bought it.

McCain’s campaign says his plan would help “millions” of borrowers stay in their homes without authorizing any new spending. But he has not said how he plans to accomplish this without lowering the standards set forth in the Frank-Dodd bill. And if he does lower the standards — by, for example, letting people who can afford their current payments get a write-down just because their property value has fallen — then he would be offering taxpayer assistance to “ruthless borrowers,” which is an industry term for borrowers who default on their obligations not because they can’t pay but because they’ve decided it’s not in their interest to pay.

McCain’s plan would also be a gift to lenders who abandoned any sense of prudence during the boom years. --The Editors, National Review Online

In other words, McCain's blowing smoke up your asses--again. He throws this crap out there, hoping it'll stick. Take a moment and research it thoroughly. Don't be fooled by yet more McCain bull.

Posted by: gang green on October 9, 2008 at 2:42 PM | PERMALINK

When NRO praises a plan from Barney Franks and Tom Dodd over a McCain plan THAT'S NEWS.

And people wonder why I am stil predicting Obama with -- okay, I've dropped the number because there are a couple of toss-ups -- 383 EVs, minimum.

Posted by: Prup (aka Jim Benton) on October 9, 2008 at 2:50 PM | PERMALINK

Wait a second -- Obama is a dangerous Marxist who wants to usher in socialism AND he's in the pocket of Wall Street.

Posted by: Jean Arf on October 9, 2008 at 2:51 PM | PERMALINK

How stupid McCain is, no, a raving idiot, beyond comprehension, for me, McCain exhibits a profound lack of genuine understanding in simple educational tools.

That projector for science, McCain seems to argue about that Obama wants to appropriate as some expenditure which is obnoxious or out of line is in fact is a serious tool in today’s technology. That projector is capable of studies in free space, light, speed; a young mind could go into the world of Astrophysics theories, or into Quantum mechanics.

Why not get our young minds to expand from a GED to a QED; Quantum electrodynamics (QED) is a relativistic quantum field theory of electrodynamics all relational to the light constant. We all know Einstein’s famous theory E=mc squared.

All that said is good foundations for science to move forward for energy independence. Obama has the vision to do this, but McCain has the moronic jerk sense to object to it.

McCain should get off the stage… quit wasting our time.

Posted by: on October 9, 2008 at 2:53 PM | PERMALINK

McCain Plan:

Government buys bad load from bank at FACE VALUE. Bank gets full value, avoids 100% of pain they deserve. Government now owns the loan, and the lender is off the hook.

Government then turns to borrower and renegotiates loan, reducing principal and/or interest. Government (us taxpayers) takes 100% of any shortfall up the ass.

Borrower, hopefully deservingly so, avoids some pain, although in this financial climate may not be able to make even the revised loan payments if they lose their job.

Obama/Biden Plan: Bankruptcy judge revises terms while bank still holds loan. They take the loss, where it belongs.

Posted by: bdop4 on October 9, 2008 at 2:55 PM | PERMALINK

McCain has just gone senile right in front of us. His plan just gives money to the banks. They really need to get that guy an EEG.

"Someone at McCain campaign headquarters really didn't think this through."

That's the McCain motto. Apparently for his entire life.

Posted by: Jeffrey Davis on October 9, 2008 at 2:55 PM | PERMALINK

In baseball, this is known as a hanging curveball. The batter (Obama) usually hits it out of the park.

Posted by: Russ L on October 9, 2008 at 2:55 PM | PERMALINK

McCain is just treading water until he takes the wraps off the Rev. Wright "God Damn America" ads he's going to run 24/7 the week before the election. I'm not going to say it will work, but given the way he telegraphed the Ayers attack (by denying it while simultaneously committing to it) I think that after Palin has tested it out for a while you'll see the Scary Black Preacher ads in full force. For a campaign who's only strategy is smear and whose only tactic is guilt-by-association, it's simply irresistible. (And, no, the fact the Wright attack pretty much failed in the primaries doesn't mean it won't work in the general election.)

Posted by: idlemind on October 9, 2008 at 2:59 PM | PERMALINK

"...McCain campaign headquarters really didn't think this through."

I googled that and got 16,548,932 hits.

Posted by: Cruel Jest on October 9, 2008 at 3:10 PM | PERMALINK

When it comes right down to it, the only answer is to nationalize everything.

Too big to fail means too big to be allowed to be privately owned.

Posted by: Praedor Atrebates on October 9, 2008 at 3:29 PM | PERMALINK

McCain had no good options at this point. Whoever said that "if they talk about the economy, McCain loses" was right. He could either keep trying to sling dirt and lose, or he could try to join the conversation on the economy and lose some more. Obama has him in a corner.

That said, McCain's plan is not complete trash. There are some good ideas in it (although a few bad ones as well). As a first cut from someone who has done zero thinking about the problem so far, it's not a bad plan. With bipartisan polishing of some of the uglier details, it might have even turned into a good plan.

That's no reason not to bludgeon McCain into submission with it, of course.

Posted by: Remus Shepherd on October 9, 2008 at 3:30 PM | PERMALINK

I really wish Obama would go after McCain's spending freeze and explain what exactly would be frozen. McCain was pushing it Tuesday claiming it will happen if he is elected. I find that to be purely delusional and downright scary and I bet I'm not the only one.

Posted by: on October 9, 2008 at 4:41 PM | PERMALINK

I really wish Obama would go after McCain's spending freeze and explain what exactly would be frozen. McCain was pushing it Tuesday claiming it will happen if he is elected. I find that to be purely delusional and downright scary and I bet I'm not the only one.

Now on, McInsane is clear on this. He wants to freeze everything except military spending, which he would expand even more.

We are already at WWII spending levels and it is destroying our economy and country. He wants to ramp that bastard WAY up and screw everything and everyone else. It is the last desperate stand for the Empire and the wannabe emperor.

The question is, will the fall happen before we manage to get the troops back home or will they be stuck high and dry?

Posted by: Praedor Atrebates on October 9, 2008 at 4:51 PM | PERMALINK

I was so shocked to hear McC^nt suggest this plan at the debate. Amazing, thought I, that John "Zinger" actually suggested that the Government help homeowners, even if it will cost us as taxpayers.

Then I realized what was bothering me. If McCunt had talked to Barney Frank when they were drafting up the 'Rescue' bill, he could have had these provisions right there and then. All he would have to do is deliver the Republican House caucus and we'd have it right now, rather than in January.

But then, John "Zinger" didn't deliver the Republicant House Caucus, did he.

Not really much of a leader if you come back from the campaign and fail to bring your own party to the floor to vote for the PRESIDENT'S policy.

Posted by: Lance on October 9, 2008 at 6:28 PM | PERMALINK

Oh, look at america running scared. No more women, no more guns, no more freedom, no more oil, no more future for you left. All gone. It is as you say "game over", america. Obama will set you losers right and you'll never be wrong again. Just sit tight at your computers all day, america, and let it happen.

OBAMA08 - Just say YES, america. That's all you have to do.

Posted by: Awarei on October 10, 2008 at 7:38 AM | PERMALINK




 

 

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