McCain's Mortgage Plan May Be His Political Suicide Note

Yesterday, both here and on my blog, I disclosed that McCain's plan - abruptly announced during the second presidential debate - to buy up individual mortgages and renegotiate the principal balance of those mortgages to reflect current home values, was previously called for by Obama and was already part of the bailout legislation signed into law by George Bush. Well, I have a slight correction of sorts: as McCain revealed details of the plan yesterday, It became clear that McCain was trying to accomplish something different, and, in the spirit of McCain policy proposals, far worse, than current law.

Politico reports that Jason Furman, Obama's economic policy advisor, released the following statement regarding McCain's plan:

Last night, in his latest attempt to get [his conflicting proposals for fixing the economy] right, [McCain] threw out a proposal that appeared to give the Treasury authority it already has to restructure troubled mortgages. But now that he’s finally released the details of his plan, it turns out it’s even more costly and out of touch than we ever imagined. John McCain wants the government to massively overpay for mortgages in a plan that would guarantee taxpayers lose money, and put them at risk of losing even more if home values don’t recover. The biggest beneficiaries of this plan will be the same financial institutions that got us into this mess, some of whom even committed fraud.... John McCain’s plan to overpay for bad mortgages by handing taxpayer dollars over to big financial institutions is erratic policymaking at its worst, and it’s not the change we need to strengthen our economy, create new jobs and keep Americans in their homes.

McCain is showing himself quite the magician in this campaign. In one broad stroke, McCain has tranformed himself from being the mortal enemy of government regulation to advocating government regulation on a scale so massive that liberal democrats are saying he's gone too far! There is one resonating constant in this new plan, though: wealthy corporations will be the primary beneficiaries. By purchasing mortgages at their face value - which is clearly above market value - McCain is giving a windfall to banks, especially considering that those mortgages might otherwise have been defaulted on.

My appraisal yesterday of McCain's plan was otherwise dead on. I predicted a flood of republican resentment for the plan, and that's precisely what happened. According to Politico, Conservative columnist and blogger Michelle Malkin had this to say:

I can’t underscore enough what a rotten idea John McCain’s ACORN-like government mortgage buy-up is.... Will he propose a similar plan for those who bought mutual funds at or near the market top?

Andy McCarthy, a conservative writer for National Review, said

The thought that he's going to win this thing on policy is foolish. I mean, now, Fan, Fred and $800 billion later, his great idea is to spend a few hundred bill more to buy the bad mortgages? Really gets the juices flowing, doesn't it?

In fact, The New York Times reports that Michelle Malkin and conservative blogger Melissa Clouthier both cosigned a tag word from my post, referring to McCain's plan as "socialist." It looks like this Hail Mary didn't work either. It's fourth and long. The time has come for McCain to punt the ball to Obama.

Rob J
Cross-posted at Opinion Streams.