McCain’s Mortgage Proposal is Another Gas Tax Holiday
October 9, 2008
This nonsense from the McCain campaign about spending taxpayer money to buy up and refinance bad mortgages has got to stop. For one thing, it’s not even McCain’s idea — the bailout package that was passed last week already contained provisions to rescue struggling homeowners.
For another, we can’t afford it. Period. It’s socialism. It would cost another $300 billion or so to bail out every bad mortgage in America. We don’t have that kind of money. The Federal government is in debt up to its eyeballs — and that debt is part of the economic problem. This country has got to stop leveraging its future to pay for its profligate past and present.
At base, this proposal is little more than base pandering. When gas prices were the worst problem on Americans’ minds, McCain proposed a summer holiday from the gas tax. Never mind that it would have been utterly useless — the rules of supply and demand would have driven the price of gas back to its pre-holiday levels in short order. It was also inadvisable from a government standpoint. The difference would have simply gone into the coffers of the oil companies, rather than the government.
Arch-neocon blogger Michelle Malkin is disgusted, calling the proposal a “crap sandwich.” She’s right. So is my favorite conservative Andrew Sullivan, who fumes over the proposal saying, “I’m starting to understand why Malkin is furious. She ought to be.”
McCain is unwilling to even categorize his priorities. When asked by moderator Tom Brokaw on Tuesday night about the order in which he would prioritize energy, health care and entitlement reform, he said, “I think you can work on all three at once, Tom.” Someone needs to tell McCain that if everything has priority, then nothing has priority.
Add my name to the list of conservatives finding McCain to be completely out of step with what this country needs right now: a dose of fiscal realism.
Additionally, this would effective reward people who bought houses they couldn’t afford based solely on the assumption that the price would go up. This is much worse than the gas holiday, which would have cost a few billion dollars and been a minor incentive for counter-productive behavior (driving more). This would cost 300 billion dollars and remove any incentives for intelligent spending behavior (until the Chinese and Saudi’s decide to cut us off).
First of all this would not cost “another” 300 billion. It would come OUT of the 700 billion bail out money. At least Mccain says directly what should be done. Reduce interest rates. Good. Rewrite existing mortgages to reflect the current value. GREAT!
The language in the Bailout only implies that the government Might do something. Reduce interest rates? Maybe. Rewrite mortgages to reflect current values? Doubtful.
Saying this would effectively reward people who bought houses they couldn’t afford based solely on the assumption that the price would go up, is narrow minded. There’s a whole hell of a lot more individuals responsible for this mess than immature borrowers. Target the big wig CEOs, like Angelo Mozilo. Take their walk away money and throw it back into the pot for starters.
Everybody has to have something to whine about whenever anything is proposed regarding the Mortgage crisis. It all sucks. It’s all unfair. I agree.
We need something to happen sooner rather than later. None of it can be squeaky clean. That’s the sad truth of it all.
My wife and I didn’t refinance our home beyond what we thought was reasonable.
Our place is built mostly on sweat equity, not refinancing. She was also laid off from Countrywide in May after 17 years and got only two weeks severance.
Our income is cut in half now. Things suck bad for us but not as bad as for many, many others. Mccains proposal is the smartest thing ANYONE has said in months regarding the Mortgage Crisis.
Oddmoore: I’m sorry to hear about your troubles. But it is not the government’s responsibility to fix them.
You and your wife made the decision to make an investment your home. You chose the loan, the interest rate, and you looked at the monthly payment and decided that you could do it.
Incomes get cut in half regularly. Life happens. People need to plan for that. You need to be able to pay your mortgage on one income, and to run your entire household for twelve months without ANY income before you even think of sinking liquid assets into a home.
And when you DO sink liquid assets into a home, it is — as I mentioned before — an investment. When you invest, you assume the risk that the value of the assets you just purchased will decrease. That’s a risk you took when you made the decision to buy your home.
I’m sorry, Oddmore, but the government owes you nothing. Even if it did, it can’t afford it right now. The national debt and budget deficit is 1000x worse than anyone’s individual financial problems.
No amount of pandering by John McCain can change that.
PS: And if McCain does get elected, do you really think he’s actually going to follow through on this promise — with all his talk of cutting spending? Politicians pander to the electorate all the time, saying things at election time that they never live up to in office. That goes for Barack Obama, too.
Oddmore - If the situation you are describing is accurate, in that your initial mortgage was reasonable (not that YOU thought it was reasonable, but that it was in fact reasonable, meaning it wasn’t an ARM or interest-only and you put at least 15 percent down), and you have put significant equity into your house, and you will be able to pay off your mortgage if your wife gets a new job within a few months, than McCain’s proposal does NOTHING to help you.
Because, if you meet the qualifications listed above, the Franks-Dodd bill, passed October 1 of this year, ALREADY will help you stay in your home. All McCain’s bill does is remove the distinction between home buyers who pushed their luck just a little and then fell on hard times (like yourself), and people who SHOULD NOT be bailed out, such as speculators, multiple home owners, and subprime borrowers.
I suggest you read the distinction, and, if you situation is in fact one of hardworking people who lived by their means and hit a small snag, then I suggest you try to take advantage of the Franks-Dodd bill immediately.
http://article.nationalreview.com/?q=MjNiM2QzZjVjZGQ3YjUyNzFjMGRlZDNmNzc3NzM2NWY=
P.S. This isn’t some liberal piece trying to bash McCain, the National Review is highly conservative magazine.
One of the things I found hilarious was when McCain said fixing social security is easy. That’s the biggest load of crap I have ever heard. If it’s so easy, not sure why nobody has done a damn thing about it for the past 20 years.
No one has changed Social Security in 20 years because no one wants to be the guy/gal that voted for a measure to reduce the benefits of their constituents.
Teresa: way to get your fiscal conservatism on! “It’s not the goverments responsibility to fix your problems,” nice! I’ve said as much on this blog before but everybody yells at me for being mean and reasonable and such.
Teresa:
You just priced 99.9% of Americans out of home ownership - not because people can’t save, but because our economy is based on them not saving THAT much, partly because wage levels are designed to give a very few people huge income margins, and everyone else stays on the wire. That’s alot of money, especially for people who live in suburban but very, very expensive areas - like the counties surrounding Washington, DC.
If people saved that much, consumer spending would plummet, and let’s face it, we HAVE built a consumer culture where people are encouraged, nearly to the point of brainwashing, to spend money on stuff they probably don’t need rather than save it. We’ve built an economy whose investment levels rather depend on a particular level of spending which, if it were to plummet suddenly, would cause alot of investment to dry up.
Thing is, I generally agree with your main thesis - that sort of financial planning is admirable. Simply untenable for many.
What strikes me is that this is the SECOND time in a century that when given more control over the economy, the financial markets have very, very quickly led straight info financial ruin. The market plummets of the past two weeks were actually, percentage AND pointwise, WORSE than Black Tuesday. It hasn’t, and probably won’t, lead to depression this time because economics are alot more complex today than they were back then.
But my main point is this - the free market is a great idea in theory, but a terrible idea in practice. This isn’t because people are greedy and they care more about making money than being socially responsible - it’s because a chaotic sum of human behavior can’t in any feasible way be directed into socially responsible outcomes. I’m basically talking chaos theory. Our cognitive faculty simply isn’t large enough to know, in any way, if our economic choices will ultimately prove to be responsible or irresponsible (although we can use history as a guide against generally very bad choices) when combined against the billions of other economic choices being made every day.
So what I’m getting at is that I think our markets should be made as free as they can be, without being so free as to be unstable - this is essentially the same model the writers of the Constitution wanted to follow - lay down a secure base and leave just enough wiggle room for change without chaos (one of the reasons free speech is necessary, by the way).
And as loath as I am to say it, this means regulation. One of the things that led to this crisis was the repeal of a 80+ year old regulation preventing the purchase of mortgage bonds by investment banks.
Depends on how you look at it. If 90% of Americans are going insolvent (just picking a number - I have no idea what the real one is) it becomes a very real problem that is just as dangerous to the economy as the nation debt and deficit are. The ability to repay that debt and make up that deficit is dependent on the financial resources of those being taxed.
But you’ve inadvertently pointed out the large crux of the problem - we’ve become doubly burdened not only by federal overspending but also by an economy built on debt. Macroscopically, debt is good - it generally indicates high levels of investment. On the individual level, debt is bad - it causes spending to atrophy. 50 years ago, the very idea of consumer debt was laughable; today, very few people can even make a living without it. That’s a very dangerous place to be, when the financial resource candlestick is being burned at both ends… and this financial crisis is, I suspect, just the beginning of the correction.
More to the point though - the federal bailout was a terrible idea. I’d rather go into a 10-year recession and learn to control my own spending than continue to prop up a system that is fundamentally broken. It needs to correct and unfortunately at this point, the only way to do it is painfully.
[...] commenter, Patrick, thinks that my argument about how much to save before buying a home has priced 99% of Americans out of home [...]