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.