The Wonk Room

McCain To Economists: I Can’t Hear You!»

Campaigning yesterday in New Hampshire, Sen. John McCain (R-AZ) renewed his call for a gas tax “holiday” and angrily attacked critics who have pointed out it’s a bad policy:

If you want to call it a gimmick, fine. You know the economists? They’re the same ones that didn’t predict this housing crisis we’re now in.

Watch it:

McCain is now resorting to false ad hominem attacks to defend his pandering proposal. In fact, numerous progressive economists who have been prominent critics of the gas tax holiday have also been warning for years about the housing bubble inflated by McCain’s favorite economist, Alan Greenspan:

– Joseph Stiglitz, Ph.D. in economics from Massachusetts Institute of Technology, Nobel Prize in Economics, 2001:

“Lower interest rates worked, but not so much because they boosted investment, but because they led households to refinance their mortgages, and fueled a bubble in housing prices. In short, as Greenspan departs, he leaves behind an American economy burdened with high household and government debt and fragile balance sheets – a legacy that is already contributing to global financial instability.” [Pakistan Daily Times, 11/11/05]

– Paul Krugman, Ph. D. in economics from Massachusetts Institute of Technology:

“In spite of record home prices, housing in most of America remains surprisingly affordable, thanks to low interest rates. That fact may seem to say that there’s no housing bubble. But it doesn’t.” [NYT, 1/2/06]

– Duncan Black, Ph.D. in economics from Brown University:

“As I’ve said a few times, while I’ve long thought that the housing bubble was indeed a bubble and I knew that people were taking out really stupid mortgages that would come back and bite them in the ass, I really had no idea that lending standards had gotten so bad. . . And this illustrates that this isn’t just a “subprime” problem. Million+ mortgages aren’t subprime. [Eschaton, 11/25/07]

“We’re at the top of a housing bubble (it may not pop, but I can’t see it continuing to rise), so it’s generally cheaper to rent in these areas than to buy.” [Eschaton, 4/24/05]

– Dean Baker, Ph.D. in economics from the University of Michigan:

“We can design a mechanism that will directly benefit millions of moderate income homeowners who are struggling to hang on to their homes. Or, we can come up with schemes that will benefit the banks and hedge funds who speculated in mortgage debt.” [TPMCafé, 8/19/07]

“When the housing bubble bursts, we will see the loss of $5 trillion in housing bubble wealth…. The economic fallout will also be enormous.” [MaxSpeak, 8/3/05]

“In the absence of any other credible theory, the only plausible explanation for the sudden surge in home prices is the existence of a housing bubble. This means that a major factor driving housing sales is the expectation that housing prices will be higher in the future. While this process can sustain rising prices for a period of time, it must eventually come to an end.” [CEPR, 8/02]

Or Senator McCain could just have read Think Progress:

“Sen. John McCain’s (R-AZ) ‘pandering’ proposal for a ‘gas tax holiday’ is smart politics but bad policy.” [Think Progress Wonk Room, 4/18/08]

“Home ownership in America may be up today, but in a nasty flip side to that coin, foreclosures are also on the rise, forcing Americans into financial disaster. . . First, skyrocketing costs across the board — health care, education, retirement - combined with lower wages are leaving many Americans in financially precarious positions. . . Second, blame predatory lenders. Just like credit card companies, which make their big bucks by aggressively marketing their products to high-risk consumers– such as college students, low wage workers and the newly bankrupt, mortgage brokers and banks have been marketing riskier ways for Americans to buy homes.” [Think Progress, 5/31/05]

UPDATE: Steve Benen at the Carpetbagger Report writes:

The problem isn’t the economists, it’s McCain’s reluctance to listen to anyone outside his bubble. Well, that and his own ignorance, despite three decades as a Washington insider.