Harry Moroz
Obama May Have Voted For The Bailout, But At Least He Explained Why
Last night’s debate was notable mostly for Senator McCain’s opening salvo: a “plan” to rescue the nation’s homeowners. How could your ears not prick up?! Yes, the powers granted to the Treasury Secretary in the bailout package are already broad enough to allow him to buy mortgages and renegotiate their terms. But still, Senator McCain’s debate proposal was in good company: Senators Obama and Clinton have both recently called for a Home Owners’ Loan Corporation-type institution, a body devoted to renegotiating mortgages to help homeowners keep their homes. HOLC, as it was known, had success in limiting foreclosures during the Depression.
Senator McCain’s newfound willingness to help struggling homeowners was, as I noted above, notable. But his failure to explain why the bailout plan is (or is not0 important to everyday Americans was striking.
Indeed, DMI released a position paper last week outlining our opposition to the bailout bill. But Senator McCain, who voted in favor the legislation, punted when asked to explain how it would affect everyday people who are “struggling”, as the questioner put it. McCain simply noted that he considers the legislation to be a “rescue” (not a bailout) and quickly moved on to blame Fannie Mae and Freddie Mac for the current financial crisis.
Senator Obama’s response was quite different. In our position paper, DMI explicitly recognizes that the $700 billion to buy troubled assets might, indeed, be necessary to get credit markets flowing. What is objectionable about the plan, and what makes it unacceptable, is its failure to address directly and as a first principle the nation’s homeowners.
Obama, referring to the bailout as “the beginning of the process”, explained to the questioner, Oliver, why he thinks the $700 billion is important outside of the financial sector:
Well, Oliver, first, let me tell you what's in the rescue package for you. Right now, the credit markets are frozen up and what that means, as a practical matter, is that small businesses and some large businesses just can't get loans.If they can't get a loan, that means that they can't make payroll. If they can't make payroll, then they may end up having to shut their doors and lay people off.
And if you imagine just one company trying to deal with that, now imagine a million companies all across the country.
So it could end up having an adverse effect on everybody, and that's why we had to take action. But we shouldn't have been there in the first place.
As Warren Buffet did on the Charlie Rose show last week when he called the current economy a “great athlete in cardiac arrest”, Obama – however briefly – explaind why he thinks the Wall Street chaos relates to millions of off-Wall Street Americans.
The American economy is suffering from a number of different, though related, problems at once. Falling equity, rising unemployment, stalled consumer spending, the threat of inflation, a falling stock market, and evaporating (or, really, evaporated) credit are some of the difficulties. Connecting several of these dots is a crucial element of the candidates’ explanations of why they should be president and is, thus, a crucial part of “winning” these presidential debates. In this regard, Obama succeeded where McCain failed.
Obama’s work now is to articulate why the bailout was, in fact, not good enough for the nation’s middle class and what steps can be taken to strengthen that middle class. McCain, on the other hand, is still at square one.
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Posted at 1:40 PM, Oct 08, 2008 in
Election 2008 | Housing
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