Today, just about every major media outlet and blog deeply scrutinized Senator John McCain's stunning proposal to commit federal funding to purchase mortgages of distressed homeowners and reissue them with more favorable terms. McCain, who admitted borrowing the idea from Senator Hillary Clinton, has altered the plan somewhat during the day, but it remains the only standing plan among the two candidates that details a strategy for providing direct assistance to homeowners.
McCain's plan certainly deserves scrutiny. First, it seems like a calculated political ploy designed to grab voters who are not sold on his ability to manage the economy. Second, there are legitimate valuation and feasibility issues that cloud the plan. Accordingly, I am happy to see specialists examine the fine print.
I am shocked, however, that the media have not asked the following question of Obama: Senator Obama, where is your plan? Today, Obama, armed with press accounts, came out swinging hard against McCain's plan. He did not, however, offer an alternative approach. This is surprising because one of Obama's most salient messages during the recent economic upheaval is that he, not McCain, understands the economy, will bring change from the last eight years, and would protect the middle-class. He even lambasted McCain for not specifically saying "middle-class" during the first presidential debate. Yet, his campaign has not designed a mortgage plan for distressed homeowners. Liberals and progressives should demand more. Saying middle-class does not pay the mortgage.
We should definitely want more details from Obama in light of the fact that:
1. He voted for the bailout legislation which actually authorizes the federal government to purchase individual mortgages and minimize foreclosures. The statute, however, is extremely light and vague when it comes to homeowner relief. It is almost exclusively aimed at providing relief to companies. Essentially, Congress has delegated authority to the executive branch to promulgate rules for helping homeowners. Accordingly, I would like to see how both candidates would "fill in the blanks."
2. Obama is rightfully concerned with the cost of McCain's plan. But Obama voted for the bailout legislation, which leaves it to the Secretary of Treasury to determine how to value assets the government purchases under the plan. Accordingly, I would like to see how an Obama administration would value these assets and how the terms of a reissued mortgage would look. Right now, I assume that Obama would not pay full value for the mortgages and then reissue them at the current, depreciated market value. Beyond that, he has not specified what he would do. Regardless of the merits of his plan, McCain has put the cards on the table. I commend McCain for doing this, even though I do not share his political ideology and even though I'm convinced that this is a political tactic.
I am not a Republican, and my political leanings are much more in sync with the Democrats, than the Republicans. Nevertheless, I want my party's candidate to create a specific plan for homeowners, rather than simply criticize McCain on this important issue. More importantly, I want the media to ask tough questions of both candidates. Candidates have no incentive to answer questions not asked of them. So unless the big networks take on this issue we will only hear from McCain, who had to do something to get voters' attention. My cynical side tells me that McCain is just playing politics, and my understanding of economics leads me to question its feasibility, but at least it's a plan. That must count for something, right?