10-16-08, 9:39 am
Exactly one month after the Wall Street meltdown, after weeks of pretending the 'fundamentals of the economy are strong,' John McCain finally offered a plan on resolving the crisis. During the final presidential debate, John McCain said, 'we have allocated $750 billion. Let's take 300 of that billion [sic] and go in and buy those home loan mortgages and negotiate with those people in their homes, 11 million homes or more, so that they can afford to pay the mortgage, stay in their home.'
But so far, McCain has been unable to explain how to pay for the plan, let alone provide specific details. According to separate media accounts of his presentation of the plan, John McCain seemed to offer competing views of his own plan. In a town hall in La Crosse, Wisconsin, McCain described the funds for his bailout plan as being 'new' and separate from the $700 billion Congress has already approved.
Later, McCain told ABC News a different story. When asked whether the money for his plan came from new money or was part of the $700 billion, McCain said, 'Part of the $700 billion, new money, if necessary.”
Still again McCain's top economic advisor Doug Holtz-Eakin told MSNBC that “first of all, it's not costing the taxpayers more money. The Congress has put on the table $700 billion to help financial institutions in an earlier bill.”
McCain's confusion aside, what he refused to emphasize in the debate was that his bailout package aims to spend $300 billion on buying 'stressed mortgages' at overvalued prices. McCain plans to spend taxpayer money to see that bank executives are taken care of at the expense of taxpayers and homeowners. Simply put, McCain's bailout protects the same banks that engaged in predatory lending practices and improper investment practices that led to the collapse of the financial markets and the housing industry in the first place.
Aside from being patently unfair, even conservative estimates of the plan see it as flawed. By purchasing 'stressed mortgages' at overvalued prices, McCain's plan would prevent taxpayers from seeing any return on this bailout when and if the housing market rebounds. The plan would also force homeowners to continue to pay a mortgage on an overvalued home in order to make sure banks come out winners.
On the flip side, if the plan actually sought to pay the actual values of the market now, taxpayers, not banks, could see a real return on the bailout when actual housing values grew again.
But that is not McCain's plan. Seemingly driven by an ideologically motivated impulse to bail out banks first under the guise of saving homes, McCain's plan earned him some sharp commentary in the business press. The New York Daily News recently described McCain's bailout as a 'no-strings-attached gift of taxpayer cash to bank executives.' Not necessarily overly concerned about that aspect, the Wall Street Journal still added that taxpayers 'take all the losses up front and don't participate in any rebound in house prices ... and taxpayers get the bill.'
Added to this new bank bailout, McCain subsequently proposed yet another capital gains tax cut. This aspect of McCain's proposal is neither new nor does it help typical working families much. It was the key feature of the Republican alternative to the $700 billion bailout passed late last month. And it has been the centerpiece of the Bush administration's economic policy since 2001.
Analysis of McCain's tax proposal has shown that the bulk of the plan is aimed at 'individuals and businesses at the top of the income scale,' in pursuit of the 'trickle down' concept pushed by Republicans for the last 30 years, suggested the New York Times this week. The Washington Post labeled McCain's tax policy likewise as 'skewed to higher-bracket taxpayers.'
Boiled down, and despite his own initial confusion on some of its details, McCain's bailout is a repackaged bank boondoggle attached to his own version of the Bush tax cuts for the wealthiest Americans least impacted by the economic crisis.
