Our guest blogger is Ed Paisley, Vice President of Editorial at the Center for American Progress Action Fund. John McCain promises to put “America’s interests before political ambitions” in his first post on Forbes.com about what he considers the most important issue facing our nation — zeroing in on housing. Unfortunately, he then proceeds to offer up eight vaguely principled platitudes as substitutes for actual policy proposals. In his piece, McCain argues:
America’s families are bearing a heavy burden from falling housing prices, mortgage delinquencies, foreclosures and a weak economy. It is important that those families who have worked hard enough to finance home ownership not have that dream crushed under the weight of the wrong mortgage.
No questioning that snap analysis as the subprime mortgage crisis cascades into the subprime and prime mortgage markets and then into the broader credit markets, reducing one of Wall Street’s storied investment banks to rubble and now threatening ever widening sectors of the economy. Problem is, McCain’s solutions to the widening ramifications of the U.S. housing crisis rely “on sound principles” that in fact fail to advance any real solutions, or worse (in the case of the last two of his eight principles), offer counterproductive or meaningless advice. Seventh on his list, for example, is this: “Our financial-market approach will include encouraging increased capital by removing regulatory, accounting and tax impediments.” The problem, however, is not over regulation of the various financial institutions that helped create the housing bubble, but rather regulatory underkill, as former Securities and Exchange Commission chairman Arthur Levitt notes in his recent column in the Wall Street Journal. Levitt says that policymakers “need to realize that the true competitive advantage of America’s capital markets has been their high quality,” which he does not define as more lax regulations or accounting guidelines. And number eight on McCain’s list is this: “Where government assistance is merited and received, all parties — lenders and homeowners — must participate in financial sacrifice in order to qualify.” Yet the seven principles that preceded his last one hold out no hope of actually providing meaningful government assistance. In fact, in this most pressing issue before our nation (according to his own reckoning) McCain offers are no policy proposals whatsoever. McCain admits he’s not a crack economist, but even his chief economic advisor, Douglas Holtz-Eagin, fails to present any cogent plan to address the housing crisis. Instead, he also dodges the issue by blaming it mostly on “speculators looking for quick profits and by investors and bankers who ignored basic rules of risk management in an attempt to cash in while times were good.” Surely he knows that most homeowners on Main Street are not speculators to be punished but rather responsible, hard-working Americans who save and invest in their homes for their and their families’ futures. An economic plan that fails to detail precisely how to deal with the housing crisis is no plan at all. Principles are not action, and action is what’s needed today. Fortunately, progressives in Congress are moving forward with some concrete proposals to stem the fallout from the housing crisis at its source — owner occupied homes. These plans, based in large part on Center for American Progress proposals to save responsible homeowners and to help neighborhoods devastated by foreclosures, contain concrete policy steps to bring relief to homeowners, the broader economy, and our spooked financial markets. McCain, on this critical issue, is engaged in mere political posturing.