Senators disown McCain mortgage plan
So whose mortgage plan is it?
After Sen. John McCain detailed for a national audience Tuesday “my proposal” to have the government buy out bad mortgages, his presidential campaign Thursday said he was actually following in the footsteps of proposals by Sen. Hillary Rodham Clinton and others.
Mrs. Clinton’s office called that claim “offensive,” and said her proposal, which she detailed last month on the Senate floor, was different.
And Sen. Barack Obama, the Democratic presidential nominee who on Tuesday claimed Mr. McCain’s plan was a rehash of an Obama plan, by Thursday was blasting the proposal as a sop to banks and a bad deal for taxpayers.
Welcome to a presidential campaign dominated by senators seeking to manage a Wall Street crisis that is confounding Washington policymakers.
Dubbed the McCain Resurgence Plan, the Republican presidential nominee proposed during Tuesday’s debate using hundreds of billions of dollars in government spending authority to buy up existing failing mortgages and reissue them at their lower current market value and at a manageable interest rate.
But the McCain campaign says the money would come out of the $700 billion Wall Street bailout package Congress passed last week, and said there’s a chance stabilizing home prices could actually bring down the cost of the bailout.
“Senator Obama was happy to bail out Bear Stearns, AIG, Fannie Mae, Freddie Mac … but he’s opposed to us helping the homeowners of America. Do you want to help the homeowners of America, or did you want to help Wall Street?” Mr. McCain said at a town-hall meeting in Wisconsin on Thursday.
However, Democrats said Mr. McCain’s proposal would leave taxpayers on the hook for the drop in home value on those bad mortgages, without making banks take a hit for having issued an overextended mortgage in the first place.
“Senator McCain actually wants the government to pay the full face value of mortgages on the books, even though they’re not worth that much anymore, so banks wouldn’t take a loss,” Mr. Obama said Thursday. “But taxpayers would take a loss. It’s a plan that would guarantee that you, the American taxpayers, would lose.”
After Tuesday’s debate though, Mr. Obama’s campaign had said the plan wasn’t new and, in fact, claimed Mr. Obama had proposed something similar weeks earlier. The McCain campaign said the charge is disingenuous.
“The night of the debate he thought this was a great idea. Why does he switch? Strictly political ambition,” McCain domestic policy adviser Douglas Holtz-Eakin told MSNBC.
Part of the problem was the McCain campaign issued an incorrect fact sheet the night of the debate that said financial institutions would take a hit in the new plan. Mr. McCain did not mention that in his own public pronouncement, and by Wednesday his campaign said the fact sheet was in error.
Mr. McCain also didn’t mention Mrs. Clinton or any other author in Tuesday’s debate, and in fact seemed to rule out co-authors.
“It’s my proposal, it’s not Senator Obama’s proposal, it’s not President Bush’s proposal,” he said.
But by Thursday, McCain spokesman Brian Rogers said the plan did match what Mrs. Clinton and others had already proposed.
Mrs. Clinton last month took to the floor of the Senate to call for updated the Homeowners Loan Corp., a New Deal-era program that also bought mortgages from homeowners and resold them at market value.
But Mrs. Clinton’s office said her proposal would require banks to absorb losses from the new mortgages, where Mr. McCain’s plan would buy back the original mortgage, meaning the government absorbs its loss of value.
“It’s offensive to suggest the new McCain plan is what Senator Clinton proposed,” said Clinton spokeswoman Kathleen Strand. “She and Senator Obama are focused on helping struggling homeowners and holding bank lenders responsible. The Bush-McCain strategy to sit back and do nothing is wreaking havoc on our economy. Senator McCain’s new plan calls for bailing out and rewarding irresponsible bank and mortgage lenders, while sticking taxpayers with the bill.”
Mr. Rogers, the McCain spokesman, said his candidate’s plan is also similar to one proposed by former Bush economic adviser R. Glenn Hubbard and Chris Mayer, both of the Columbia Business School. But a day earlier, on a conference call with reporters, Mr. Holtz-Eakin had said he was aware of but hadn’t examined the Hubbard proposal.
Some have also compared Mr. McCain’s plan to one proposed by the Center for American Progress, a liberal think tank. Mr. Rogers said that was not the case.
McCain has been blasted from the right and the left for his plan, with fiscal conservatives saying they used to be able to predict how he would come down on questions of spending and government intervention.
“You have John McCain who said he’s going to veto every bill that contains an earmark, and then just recently said he would have supported the continuing resolution that contained thousands of earmarks. This is a guy that stood up against ethanol subsidies but then supported bailing out the automakers. And this time, this is a guy who wants to hold the line on spending, who wants to give a five-digit welfare check to millions of homeowners,” said Andrew Roth, director of government affairs at the Club for Growth, a free-market advocacy group.• Explore different election-night scenarios with our ‘Road to 270’ interactive electoral college map
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