McCain, Under Pressure, Revisits Economic Questions
By Alec MacGillis and Krissah Williams
John McCain may be climbing steadily in the polls as Barack Obama and Hillary Clinton continue their slugfest, but his campaign seems to have recognized that the other side was landing some potentially damaging blows this week with charges that McCain's economic plan was less laissez-faire than plain old cold-hearted.
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. "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 said Tuesday.
The Democratic candidates took their eyes off each other long enough to pounce on McCain's speech, noting that McCain's distaste for government intervention did not keep him from endorsing the Federal Reserve's role in the Bear Stearns rescue. Obama said McCain was taking "the road that George Bush has taken for the last eight years. It's the idea that the government has no role at all in solving the challenges facing working families. That all we can do is hand out tax breaks to the wealthiest people and let the chips fall where they may. George Bush called this the 'ownership society,' but what he really meant is 'you're on your own, society." And Clinton added in a speech today that "we've had enough of a president who didn't know enough about economics, and didn't do enough for the middle class."
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. But he again stopped short of endorsing any particular remedial measures, beside asking lenders to help out.
"We have a responsibility to take action to help those among them who are deserving homeowners, and as I said this week, I am committed to considering any and all proposals to do so. Any action must further look to the future to make certain this never happens again," McCain said in his statement. "As I said on Tuesday, I believe the role of government is to help the truly needy, prevent systemic economic risk, and enact reforms that prevent the kind of crisis we are currently experiencing from ever happening again. Those reforms should focus on improving transparency and accountability in our capital markets -- both of which were lacking in the lead-up to the current situation."
"However," he added, "what is not necessary is a multi-billion dollar bailout for big banks and speculators, as Senators Clinton and Obama have proposed. There is a tendency for liberals to seek big government programs that sock it to American taxpayers while failing to solve the very real problems we face. This is a complex problem that deserves a careful, balanced approach that helps the homeowners in trouble, not big banks and speculators that acted irresponsibly. I again call on our lending institutions, where possible, to step up and help Americans who are hurting in this crisis."
In a conference call, McCain adviser Carly Fiorina, the former Hewlett-Packard CEO, charged Obama and Clinton with mischaracterizing McCain's approach. "John McCain said the role of government is to protect the truly needy and make sure that we stop systemic risk, which is why he supported the bail out of Bear Stearns," she said. "To describe John McCain's politics as do nothing is simply politics of the worst sort ... John McCain would distinguish between bad actors and good actors, between hardworking Americans ... and risk-takers who made bad investments. John very specifically called for reforms to make sure that this never happens again. We know that there are billions of dollars worth of transactions here that escaped scrutiny, and we need to look at that."
As Fiorina saw it, McCain's call to the mortgage industry to assist struggling homeowners was in and of itself a call to action. "I find it fascinating that the Dem candidates are ignoring the fact that John McCain has made a very specific call to the mortgage industry to step up and help their customers," she said. "He's said to the industry: You help your customers while you are asking for others to help you."
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."
Despite those nice words, the Obama campaign wasn't about to let McCain off the hook. "In his continuing struggle to understand the economy better, John McCain attempted a do-over on his economic speech today that still offers not one single idea or proposal to help struggling homeowners," Obama spokesman Bill Burton said.
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