Highlights From 'That One'‏

October 8, 2008

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, and Ryan Powers Contact Us | Tell-a-Friend | Archives | Permalink | Subscribe to Feed

ELECTION '08

Highlights From 'That One'

Last night, Sens. John McCain (R-AZ) and Barack Obama (D-IL) participated in a town-hall style debate at Belmont University in Nashville, TN. The debate came after a week in which the financial crisis seemed to be worsening and on a day when the Dow lost over 500 points, despite the recent passage of the $700 billion Wall Street bailout package. Given economic turmoil focused the two candidates primarily on domestic issues including the economy, safety net programs, and health care. McCain used the debate to seemingly abandon his previous opposition to mortgage relief for struggling homeowners and to play up false fears of crisis-level budget problems in federal entitlement programs. The AP notes that McCain's American Homeownership Resurgence Plan bears a striking resemblance to a plan proposed by the Center for American Progress, which has "been pushing a similar idea for some time." Unfortunately, McCain has spent the better part of the last few weeks working with his conservative allies to kill any effort to pass such a proposal.

A MODEST PROPOSAL: McCain's campaign said in a statement that the plan is designed "keep families in their homes" and "stabilize the housing market" by purchasing mortgages "directly from homeowners and mortgage servicers" and replacing them with "manageable, fixed-rate mortgages." It is still unclear exactly which homeowners would benefit from his plan, how he would pay for it, or why he had previously rejected similar mortgage relief efforts. But as the AP notes today, the few details of the plan McCain does provide suggest that he is now embracing an approach to alleviating the financial crisis put forward by CAP in December 2007. At the time, Andrew Jakabovics, the Associate Director of CAP's Economic Mobility Program, explained that while a variety of mortgage relief programs already exist at the federal level, there are a significant number of families with "decent credit" who don't qualify for mortgage relief because their mortgages are "under water" --in other words, the housing market decline has left them owing more on their mortgages than their homes are worth. Jakabovics proposed reviving the New Deal-era Home Owners Loan Corporation in the form of a new institution, the Federal Foreclosure Rescue Corporation (FFRC). As CAP envisioned it, the FFRC would be empowered to buy "up the old adjustable-rate mortgages from lenders and investors and replacing them with new, tax-friendly government-rated bonds equal to the current value of these homes," while issuing "new fixed-rate mortgages to those borrowers facing default."

FALSE THREATS: As a segue into the social safety net portion of the debate, moderator Tom Brokaw claimed that "in a bipartisan way, everyone agrees" that entitlement programs are "a big ticking time bomb that will eat us up maybe even more than the mortgage crisis." McCain echoed Brokaw's sentiment saying with regard to Social Security, "We know what the problems are, my friends, and we know what the fixes are," but declined to name either the "problems" suggest any "fixes." Despite Brokaw's alarmism and McCain's empty rhetoric, there is no Social Security crisis. As economist Paul Krugman lamented recently, "No matter how many times you try to kill the mythical Social Security crisis, it just keeps coming back." With regard to Medicare, McCain said, "[W]e are not going to be able to provide the same benefit for future retirees that we have today." He called for a "commission...come up with recommendations" on how to address those declining benefits. Earlier this week, McCain's economic adviser Douglas Holtz-Eakin admitted that the reason why McCain believes the United States will be "unable to provide" the same level of Medicare benefits in the future is because he needs to slash $1.3 trillion from Medicare and Medicaid to pay for his radical health care plan.

FORTHRIGHTNESS IN FOREIGN POLICY: In the foreign policy portion of the debate, McCain distinguished himself by making several puzzling misstatements and false claims. He began by arguing that if U.S. forces had withdrawn from Iraq, Iranian influence would have increased and al Qaeda would have ballooned. In reality, both of these things happened because we invaded Iraq. McCain argued that the U.S. needs to execute the "same" surge strategy in Afghanistan as we've had in Iraq, but Gen. David D. McKiernan, the new top U.S. commander in Afghanistan, "stated emphatically that no Iraq-style 'surge' of forces will end the conflict there." McCain incorrectly referred to Gen. David Petreaus, the commander of Central Command, as the "chairman of the joint chiefs of staff." McCain also chastised Obama for "announcing" that he would strike Osama bin Laden in Pakistan without Pakistan's permission, if need be. Just recently, however, McCain defended his running mate, Gov. Sarah Palin (R-AK), when she said essentially the same thing.