I know I've knocked Obama plenty of times on this blog (I'd guess somewhere around 6...), but I don't recall ever praising McCain. Today that's going to change. Here's why:
McCain is in the right on the purchasing-mortgages-and-renegotiating them issue. What he's proposed is to take the $700 billion bailout and use that money to buy mortgages off. Then the government will renegotiate those mortgages at whatever price the home is currently worth. Which means that if you've got a $200,000 mortgage and your home is now worth $150,000 (and this is very common right now) the government would basically forgive that extra $50,000, and start you off at the much more manageable $150,000. This is a plan that will save homeowners from foreclosures. This is a plan that eliminates a lot of the risk in the housing market. This plan should consequently help stabilize values (not entirely, but somewhat) and make it easier for people to get new credit.
Just think about it: right now people owe more on their homes than their homes are worth. This plan basically consists of the government swallowing the difference. That's a huge benefit. Plus it'll lower every monthly payment (by roughly the same percentage as it lowers the total owed), making it easier for people to pay their mortgages, and thus for the government to get something in return. And it's almost exclusively directed at the lower and middle classes. I spend time almost every single day trying to help my clients get loan modifications as a way of preventing foreclosure. They aren't easy to get (though they're getting easier), and they usually don't involve forgiving the entire difference in value. This plan is aimed at my clients. This is beautiful. This is NOT the kind of plan I expected to hear a Republican support. This is something I was hoping I'd hear from Obama. In fact, if Obama had come out with this, he would have sealed up my vote.
Instead, Obama's been really strongly opposed to it. Today he toned down the rhetoric a little, but he's still against the plan. He's saying it's too costly for taxpayers. That makes no sense, since it's already cost us - all of this money comes from the $700 billion bailout. You know, the one that Obama voted for. He's also saying that he disapproves of paying full-price for the mortgages because that "rewards" irresponsible lending companies. And here he would have a good point, except that the people who currently hold the mortgages are almost exclusively secondary purchasers. That means they weren't the ones who made bad loans, entered into fraudulent practices, or any of the other problems that caused this mess. They were buying up mortgages (Something that was supported by the Democratic party. Again, a surprising disappointment for me there. Largely tied to lobbying if I'm not mistaken.), without looking to see if they were good or not, but the current purchasers aren't nearly as much to blame as the ones who made the loans. So giving them full price, although it isn't ideal, is better than not doing the plan.
Basically then, we've got this $700 billion out there to help Wall Street. It's a lot of money that we should basically consider already-spent. At least McCain has proposed a great way for that money to be put towards helping the little guy.
I was about 90% towards voting Obama. Now I'm 50/50. And I don't know what to do. I really just wish Obama had embraced this plan too. Because all partisianship aside, McCain is right on this one.
He's a newspaper man
And he gets his best ideas from a newspaper stand