McCain Gets Remedial Economics Lesson

Posted by Scarecrow , Firedoglake at 6:04 AM on March 28, 2008.

On Tuesday, John McCain attempted to address the economy by promising he would only do what makes sense and never be dogmatic. He then repeated standard Republican dogma by excusing the Fed's massive bailout of Wall Street investment bankers while offering nothing to its Mainstreet victims. The problem was a few bad actors (including irresponsible homeowers) but surely didn't require a fundamental overhaul of regulatory oversight.

"It is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers," McCain declared, giving only scant attention to "deserving" homeowners while using the same tone he uses when promising never to surrender in Iraq.

But then he got hammered in speeches by Senators Clinton and Obama.

By Thursday, faced with Democratic criticism, McCain's advisers had to explain he really did want to help deserving homeowners and really would consider regulatory remedies.

In a speech Tuesday, McCain pointedly stopped short of offering the kind of wholesale measures to stem the subprime mortgage and bankruptcy crises that Obama and Clinton are tossing about, suggesting that to do so would only reward bad behavior at taxpayer expense. Instead, McCain repeated his call for the lending industry to do all it could to help struggling homeowners with a legitimate claim to assistance. . . .

So the McCain campaign revisited the issue today, issuing a statement saying that he would not be opposed to all attempts to help struggling homeowners, as long as speculators were not bailed out. . . .

McCain's economic adviser, Doug Holtz-Eakin, chimed in by seeking to associate McCain with Obama's call for more effective financial regulation in a Wall Street speech today.

On Tuesday, McCain had warned that undue new regulations would threaten economic recovery, but Holtz-Eakin argued that Obama's proposals were in essence little different than what McCain was talking about. " They are wonderful words and they are words that you could hear out of a Republican or a Democrat," he said of the Obama speech. "I don't think there is any grand disagreement about the need for effective regulation. The bottom line that Senator Obama came up with is what Senator John McCain said on Tuesday."

Right.

The reference to Obama's economic speech is telling. Senator Clinton proposed remedies for the housing/mortgage crisis months ago. Monday she gave an economic speech on the mortgage crisis and focused on the topic again on Thursday (transcript). Her proposals -- except for asking Greenspan to help design further remedies -- merit as much attention as those in Obama's speech.

But Obama has the ability to reframe the discussion, just as he did on race. He can change the conversation, and the McCain people must know this. McCain is vulnerable on the economy, because the Bush Administration has blown it big time and because McCain realizes he hasn't a clue what to do about it. It was his economic advisers who came out to respond, and they weren't citing Alan Greenspan, but Barack Obama.

More on the Obama speech in the next post.

Scarecrow is a regular blogger for FireDogLake