Wednesday, October 8, 2008

McCain's resurgence policy beats Obamanomics

Economic policy will make or break this election…and the next presidency.

It’s clear that our next president will have to do some heavy lifting to pull the U.S. economy back on its feet, and the steps to recovery have been hotly contested. During last night’s presidential debate, the candidates addressed our struggling economy and their plans for remedy.

Obama spewed more standard democratic slogans, insisting that tax breaks for middle-class Americans will help us avoid economic ruin.

Really? How will a tax cut help someone who is already upside down on their mortgage and in immediate danger of losing their home? Are we talking like tens of thousands of dollars in tax cuts for every person? Can we get that money like next month? That’s how fast Americans are foreclosing. For some, it has already happened. How will a tax cut help those who have already lost their homes?

One of the problems snowballing this crisis is that many homeowners are upside-down on their mortgages (sometimes called “negative equity”). Even if they could sell their house at fair market value they’d still owe more money than they’d receive on the sale.

McCain highlighted a plan to help families restructure mortgages. His plan isn’t perfect (and I’m still not a fan of his vote on the $700 billion “rescue” plan). I don’t think forgiving debts, which this plan would in some cases, is the best solution. It’s giving a man a fish versus teaching him to fish. Struggling homeowners would be better served by a plan that allows them to opt for interest-only payments for a few years, at least until they have some positive equity in their homes again. That would provide much needed relief without giving the false impression that we can continue to dig ourselves into financial holes and expect the federal government to pull us out.

I would also alter McCain’s plan to include homeowners with zero down payment mortgages, which his current plan expressly excludes. Was it stupid to buy a house without any down payment at all? Yes. If you can’t afford a down payment you should be renting. But this stipulation would exclude from McCain’s resurgence plan a significant number of families who urgently need help restructuring their mortgages. Without help they will surely lose their homes, regardless of how swiftly Wall Street is recovering.


P.S. So good to see Rach writing again. I missed your acerbic wit and pointed observations.

Tuesday, October 7, 2008

Two down, one to go

I realize it's been awhile since my byline crossed the blog ... nothing like politics to bring me back!

Tonight's second presidential debate was a tad boring and predictable. McCain came off as snarky. Obama came off as a bit more nuanced. Tom Brokaw somehow wins the bitter award.

Since the candidates rarely say anything new or different in these debates, half the fun has been watching the moderators. Jim Lehrer was like a stern father -- "look at each other when you talk!" Gwen Ifill was ... well all I can picture is the Queen Latifah version. Tom Brokaw was more sassy tonight than I've seen him, and the whole debate setup seemed a little wonky and loose (despite Brokaw's best efforts).

And some brief thoughts on what the candidates said tonight...

-Both have time sticking to time restrictions. Wow.

-Yes, everyone is talking about how McCain called Obama "that one." It was condescending which, sadly, is not entirely unusual for the Mac.

-I thought it was funny that McCain sought to buy himself time with the Treasury Chief question. He first replied "not you, Tom" and paused for nonexistent laughter. Then all he could come up with was the CEO of a company that laid of 10 percent of its workforce this week.

-Along with most of his other classes, McCain must have failed math at the Naval Academy. He keeps talking about adding things that aren't possible. For example, he wants to go buy every failing mortgage in the country. Uh, how are you gonna pay for that, pal? He refuses to raise taxes and at the rate we're going, they're going to have to invent a new number to describe the national debt. (Freezing all programs is not an option -- some people in this country, those who don't have seven houses, actually depend on those programs.) Also a mathematical problem, the troops -- how are you going to get the increases you want in Afghanistan while maintaining surge numbers in Iraq? The numbers aren't there so we either need a random enlistment rush, a draft or troops out of Iraq.

-Watching CNN's undecided voter tracking was actually really interesting. The approval numbers dropped below the middle line every time the candidates went negative. This doesn't bode well for McCain, since he spent more time than Obama doing smearing.

-McCain made a comment about wanting to chair a commission with "smart people." My friends and I have been debating the importance of smarts recently -- to be precise, since Sarah Palin came on the scene. Some conservative friends maintain that having "the smarts" is not entirely necessary to win hearts and votes. I thought it was funny that McCain puts trust in intelligent people to sort through tough situations...

-If McCain says "my friends" one more time I'm going to hurl. Can we at least get him a thesaurus? In debate three I want to hear "my acquaintances" or maybe "my homies."

Despite all this, the next 28 days will be filled with assertions that Obama is a gay Muslim terrorist. Yay democracy!

Monday, October 6, 2008

Why the bailout is bad for business

Bailing out failing companies without restoring investor confidence is useless. Deteriorating financial institutions hurt our economy, but the resulting decline in investor confidence is the real crisis.

It’s important to remember that these businesses failed for good reasons. They took on reckless investments, sometimes at the urging of the federal government who now wants to hand over $700 billion to revive our tanking economy.

If officials really want to stop the bleeding they’ll halt earmark-laden legislation and start working with financial markets, encouraging more deals like the WaMu and Wachovia buyouts. In the days following the crash, the federal government has overestimated it’s own political clout. Consumers won’t invest their hard-earned dollars simply because you tell them it’s safe. At this point, confidence would be better restored with corporate solutions, especially in the U.S. where faith in our government is dwindling.

Over the past week, countless economists and journalists have compared this crisis to the events leading up to the Great Depression. It’s hard to deny the parallels: the three greatest tragedies that tanked our financial system during the 1930s were the credit crisis, irresponsible lending on the part of financial institutions, and the government’s failure to provide aid to struggling families. Our current situation paints a distressingly similar picture. It makes a government rescue seem necessary, if not inevitable.

But don’t underestimate the market. Overzealous intervention could do more harm than good. The market weathers peaks and valleys with remarkable resilience and it will eventually self-correct. We may not all be better off when that happens: homeowners who bit off more mortgage than they could chew could still lose their homes, and fiscally irresponsible companies could still be out of business. But allowing this process of economic natural selection is the best solution.

If we must have government involvement let it be limited to helping the families most affected by this crisis. Let’s come up with payment plans to help middle-class Americans keep their homes.

With the Dow still hovering above 10,000, we’ve yet to see the bottom of this slump. But a $700 billion lifeline won’t stop the recession in its tracks.

You can take that to the bank.

Friday, October 3, 2008

Palin's debate debacle

Alaska Governor Sarah Palin’s performance at the Vice Presidential debate last night concerned me. I have always believed she was a smart choice for VP (see “McCain-Palin is a Winning Ticket”), but last night the “pit-bull with lipstick” I had grown to love during the RNC had too much bark and not enough bite.

I don’t want to criticize without offering some possible solutions, so Governor Palin, here are a few ways you can win back my confidence:

1. Get the facts straight. Fast-talking rhetoric and charm are impressive during a debate, but in this technology-driven world the facts will catch up with you in the morning (probably even sooner). That doesn’t mean you should change your style of speaking, just make sure you have rock-solid facts to back you up. Here’s an example from the debate last night when you could have used a fact-checker:

Palin: “Now, Barack Obama had said that all we're doing in Afghanistan is air-raiding villages and killing civilians. And such a reckless, reckless comment and untrue comment, again, hurts our cause.”

In August 2007 Obama did say that American troops in Afghanistan were killing civilians (“We’ve got to get the job done there and that requires us to have enough troops so that we’re not just air-raiding villages and killing civilians, which is causing enormous problems there.”). Unfortunately, that’s because it was true. At the time, 286 civilians had been killed by US troops, according to the Associated Press; Afghan insurgents had killed 231.

I hate that he said it too, but the facts are pretty damning.

2. Keep up on current events. When Sen. Joe Biden claimed that our commanding officer in Afghanistan said the surge principles we applied in Iraq will not work there, you admirably tried to call him on it. Unfortunately, Biden’s information was more current. Tuesday’s Washington Post reported that Gen. David McKiernan “stated emphatically that no Iraq-style ‘surge’ of forces will end the conflict [in Afghanistan].”

Here’s the link.

Along those same lines, our commanding general in Afghanistan is McKiernan, not McClellan. I hate to nit-pick, but this is the kind of blunder that made our current president an international laughing stock. Let’s not give Tina Fey any more fodder for SNL.

3. Learn phonics. It’s pronounced NUCLEAR, not “nu-cu-ler.” Way to sound exactly like Bush.

Since you’ve been governor for less than two years, I’m inclined to give you a second chance. My confidence is wavering but not lost. A few simple changes could bring it back in full force.

A Note to Sen. Joe Biden: McCain didn’t vote against funding alternative energy 20 times, it was 11. Stop exaggerating. Also, McCain didn’t refuse to meet with the government of Spain, his simply declined to commit to any meetings during an interview.