Thursday, April 10, 2008

Sleepers, Wake: McCain notes the 'deserving' distressed homeowners

McCain's astonishing reversal of the position he staked out two weeks ago in response to the mortgage crisis has at least the virtue of being an honest flip-flop. McCain has taken a new look at the facts, and in his wisdom concluded that rather than telling distressed homeowners en masse to drop dead, it might behoove government to help some of them restructure their loans.

The problem here is not, I think, dishonesty -- this is not Mitt Romney faking a moral conversion on abortion, or for that matter McCain embracing the Bush tax cuts he once lambasted in order to cater to a core constituency. He really has noticed that the housing crisis threatens major economic and social disruption (and of course, doubtless recognized that he'll lose the election if he advocates doing nothing more than jawboning mortgage lenders). But it is fresh evidence that McCain simply does not think through major policy issues. His March 25 speech rejecting any substantive loan restructuring help to homeowners addressed the current crisis, as I've noted before, from a 'while I was sleeping' stance; he kept suggesting in the future tense that he would entertain proposals for dealing with the crisis, as if it had just been brought to his attention. Clinton and Obama, in marked contrast, were both able to back up claims in speeches delivered that same week that they had called a year ago for the kinds of aid they're calling for now.

For a septuagenarian with twenty one years' tenure in the Senate, McCain's policy positions are curiously unformed. He may talk straight, but he doesn't think straight. His 'maverick' impulses war chiefly with his own other impulses. That's probably why he can flip-flop without appearing unprincipled.

Today's New York Times has an article in which rival aides describe McCain's oscillation between neocon and realist foreign policy schools. The article detailed his past noninterventionist positions -- against U.S. troops in Lebanon, Somalia and Haiti, and against using ground troops in the first Gulf War. It neglected to mention his consistent calling (in 1999, 2002, 2006) for aggressive confrontation with North Korea, even if that meant risking war, including nuclear war; his bitter criticism of Bill Clinton for ruling out ground troops in Kosovo; and his long advocacy for taking out Saddam. On economic policy, he was of course against the Bush tax cuts before he was for them -- a reversal over the course of three or four years. Now he has outdone himself , executing a 180 over the course of two weeks.

One element did hold steady across the two housing crisis speeches: the moralizing. McCain can't talk about those in need without setting up Goofus and Gallant contrasts. Two weeks ago, distressed homeowners were a ragtag 5% spoiling the party for those moral paragons slaving away in pursuit of a downsized American Dream:
Of those 80 million homeowners, only 55 million have a mortgage at all, and 51 million are doing what is necessary -- working a second job, skipping a vacation, and managing their budgets -- to make their payments on time. That leaves us with a puzzling situation: how could 4 million mortgages cause this much trouble for us all?
In the ensuing two weeks, someone apparently whispered in his ear that some of those four million might also be part of the moral majority. So he's determined to sort them out:
Let's start with the housing challenges. There is nothing more important than keeping alive the American dream to own your home, and priority number one is to keep well meaning, deserving home owners who are facing foreclosure in their homes....[my plan] offers every deserving American family or homeowner the opportunity to trade a burdensome mortgage for a manageable loan that reflects the market value of their home. This plan is focused on people. People decide if they need help, they apply for assistance and if approved the government under my HOME Program supports them in getting a new mortgage that they can afford. There will be qualifications which require the home to be a primary residence and the borrower able to afford a new mortgage.
I'm not suggesting that McCain's conditions for providing mortgage aid are not sensible ones. But the key questions there are whether the home is a primary residence and whether the homeowner has the resources to pay off a loan with an interest rate in single digits. It's true that good policy will aim to avoid 'moral hazard' -- bailing out speculators or those who bought a home they had no means to pay for. But economic policy can't parse the moral fiber of each program participant. Is it your primary home, and can you pay off a restructured mortgage? Do you need it, and can you benefit from it? Not 'are you deserving'? Yet this persistent moralizing pervades McCain's speeches. He's as Manichean as Bush -- on the world stage, and at home.

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