The mess on Wall Street presents a huge opportunity for John McCain, but he needs to act fast to reap the benefits.
The Democrats and President Bush ““ an unusual pairing, I know ““ have been working to pass legislation that the American people disfavor by 10-1. The $700-billion deal they are supporting will force people to bail out Wall Street with their tax dollars. Now, that is not change.
The Republican presidential candidate took a bold step when he suspended his campaign to help resolve the financial mess. McCain spoke out against the deal and spoke up for the average Joe, putting his support behind a different plan that would hold the companies responsible by forcing them to purchase their own insurance and take out loans in return for government aid. Obama followed McCain’s lead.
After an intense weekend in which lawmakers tried to come to an agreement, a plan was finally proposed yesterday. To Wall Street’s dismay, the bill failed after being voted down 228-205. Now, given the clear hostility toward a taxpayer-funded bailout, McCain needs to go back to the table and reassert his commitment to a lending program. It would be a winning move, demonstrating how he and his Republican colleagues are looking out for average Americans.
McCain missed a shimmering opportunity at last Friday’s debate by failing to adequately address this issue and exploit his offensive position on the economy. He also needed ““ and needs to ““ remind people that Obama’s economic policy, if at all coherent, is dangerous to the country in the way it gouges ailing taxpayers.
McCain could have won the debate outright by seizing upon two issues.
First, he should have disassociated himself from Bush by explaining that he is heavily critical of the bailout plan, while Bush and the Democratic Congress are pairing up to punish taxpayers. And more importantly, he should have pummeled Obama on his tax plan.
With companies failing right and left for want of capital, the capital gains tax increases that Obama is proposing would be a crippling blow that would cudgel small business and cost us jobs. It would be like putting a pillow over someone’s mouth as they gasped for air.
There is simply no reason why this crisis should benefit Sen. Obama. Bloodletting the American people by raising taxes would induce a rash of selling (of stocks, homes, etc.) that could hasten our economic doom. No, taxes are not the relief the economy is craving. Obama even conceded during the debate that he might have to alter his tax policy if the economy stays weak. But then how would he fund other proposals, such as his ambitious health care plan?
Mentioning these inconvenient truths would have knocked Obama off his even keel. But instead, McCain chose to go after him on earmarks and wasteful spending which, while also valid grievances, don’t pack the punch that he needs to eclipse Obama.
Despite the conventional “wisdom” that people should turn to Democrats in times of financial crisis, Democrats are not the soothsayers many people think they are.
It is important to remember ““ and convenient to forget ““ that our present calamity began when the Democratic-controlled Congress began to encourage lending by Fannie Mae and Freddie Mac to low-income citizens. The lending heralded a huge increase in the number of subprime loans that ultimately could not be repaid. These companies kept regulators at bay by doling out huge contributions, of which Barack Obama was the second-largest recipient.
We know that Obama will continue to fashion McCain as a copy of George Bush, linking him to “failed economic policies” and mentioning that he voted with him some 94 percent of the time. (It’s easy to forget that most senatorial votes are unanimous.)
So the next time he criticizes McCain with this kind of attack, McCain should turn the tables on Obama by asserting that on this key issue, the bailout, he has lived up to his “maverick” nickname while the Democrats have supported special interests.
The situation is win-win for McCain. If the bill eventually passes more or less in its current form, he can attack the Democrats for bilking taxpayers of $700 billion. And if he holds his ground and manages to bring Congress to support a lending plan, McCain will look like a champion. Either way, the ball is in his court.
E-mail Pherson at apherson@media.ucla.edu. Send general comments to viewpoint@media.ucla.edu.