Monday, October 06, 2008

How McCain can Win: Run Against the Bailout

Run against the bailout. Yes, that sounds counterintuitive because McCain voted for it, but it's not. The bailout may have been the only economic package that Congress could come up with and pass while operating in a crisis atmosphere, but most Americans deep down know that a $700 billion bailout of Wall Street, even if necessary and the only option given the circumstances is still a symptom of a deeper more insidious set of problems that haven't been addressed. A bailout bill to "rescue the economy" can simultaneously be the only option and a symbol of just how badly Washington has been doing - or, should I say not doing - its job.

Washington bears the blame for creating the crisis that Washington is now attempting to solve with the bailout. But the bailout doesn't address the main problems that Washington caused - it doesn't reign in the Community Reinvestment Act, for example, which encouraged a flood of sub-prime lending that it at the core of the mess. (Fannie Mae and Freddie Mac then securitized those risky mortgages.)

http://ivablogger.blogspot.com/2008/10/how-mccain-can-win.html

How McCain can Win
As most of you know, I am a big fan of the uber-blogger Bill Hobbs. Here is his 10 point strategy that McCain advisors should take heed (I really wish he would have done #2):

1. Return to Michigan. Actually, send Sarah Palin and her United Steelworkers Union/commercial fisherman/oil fields worker husband Todd to campaign in Michigan, and have them compare the Obama-Biden economic plan - higher taxes, more regulations, bigger government, huge spending increases - to the virtually identical economic policies of Michigan Gov. Jennifer Granholm, which have been disastrous for Michigan. Under Granholm, Michigan's economic decline has accelerated. Obama-Biden would step on the gas. Sarah and Todd Palin can make the case effectively - and they'll resonate with Michigan's blue-collar voters.

2. Run against the bailout. Yes, that sounds counterintuitive because McCain voted for it, but it's not. The bailout may have been the only economic package that Congress could come up with and pass while operating in a crisis atmosphere, but most Americans deep down know that a $700 billion bailout of Wall Street, even if necessary and the only option given the circumstances is still a symptom of a deeper more insidious set of problems that haven't been addressed. A bailout bill to "rescue the economy" can simultaneously be the only option and a symbol of just how badly Washington has been doing - or, should I say not doing - its job.

Washington bears the blame for creating the crisis that Washington is now attempting to solve with the bailout. But the bailout doesn't address the main problems that Washington caused - it doesn't reign in the Community Reinvestment Act, for example, which encouraged a flood of sub-prime lending that it at the core of the mess. (Fannie Mae and Freddie Mac then securitized those risky mortgages.)

The bailout bill is like giving a transfusion to a gunshot victim while neither removing the bullet or closing the wound. McCain needs to point out who pulled the trigger.

3. Don't run against Congress. Run against Washington.

4. Hammer Obama on the Wall Street mess. It's Obama's party's fault more so than the Democrats. Obama and Biden are blaming George Bush's economic policies for the Wall Street mess, but the truth is that the seeds of the crisis were planted in the 1990s, during the Clinton administration, while the five years of rapid economic growth during the Bush administration (2002-2007) actually forestalled the crisis by helping housing prices continue to rise. Once the economy hit an inevitable downturn, falling housing prices exposed the problem with the sub-prime loans.

Democrats want to blame "deregulation" by Bush, but they can't make the case stick as most of the deregulation legislation they (wrongly) blame pre-dated the Bush administration. Bush and McCain, meanwhile, proposed legislation to reform Fannie Mae and Freddie Mac - reforms that might have prevented the current crisis. Who killed their proposals? Democrats like Sen. Chris Dodd and Rep. Barney Frank.

Obama was basically AWOL on the issue - he made no meaningful legislative attempt to address the problems.

5. Hammer Washington for the pork, earmarks and giveaways stuffed into the "economic rescue" bailout bill. "You will know their names and I will make them famous," McCain has promised. He should keep that promise.

6. Hammer Obama on his tax proposals and his spending proposals. Obama has promised a trillion dollars in spending increases. Asked at the debates what spending promises an Obama-Biden administration would have to cut because of the $700 billion bailout of Wall Street, Obama named nothing, but talked about things he would spend more on, while Biden said they might have to delay a plan to double the amount of money Uncle Sam spends on foreign aid. He named nothing else.

The federal government spends around $25 billion a year on foreign aid. Biden just said they would offset a $700 billion emergency spending increase by delaying a $25 billion increase in one program. The math doesn't add up.

Obama and Biden promise to shrink the deficit, but you flat can not increase spending by a trillion dollars, on top of a one-time $700 billion emergency expenditure, offset it by delaying a $25 billion spending increase, and shrink the deficit without raising taxes.

So, Obama-Biden will either have to balloon the deficit and national debt by unprecedented amounts - with all that borrowing likely causing a huge new "credit crunch," by the way - or will have to massively increase taxes in the middle of a recession.

Obama promises to cut taxes. Bill Clinton promised that too when he was first running for president. A few weeks after he was sworn in, Clinton raised taxes on the middle class.

7. Promise to submit only balanced budget proposals. The Washington elites will scoff and say it can't be done, but there's no reason other than a lack of political will that it can't be done. It will force the other side to stamp their feet and demand deficit spending. Let 'em. Main Street Americans in their gut know that a federal government that spends trillions of dollars probably could get by with a little less, and that allowing it to spend more makes tax increases more inevitable in the years ahead.

8. Point out, endlessly, that Joe Biden's tenure in Congress has been so effective that America doesn't have any problems that $700 billion in taxpayers' money can't fix. Yeah, McCain has been in the Senate almost as long, but Biden's party was in the majority for more of those years.

9. Let Palin take the lead on economic issues. She has the right instincts (she's a Reaganite supply-sider) and she's got the street cred as a middle class working hockey mom from Main Street America to make the case. For all his virtues, McCain does not have a deep policy background on economic issues and his family wealth makes it easy for Obama-Biden to attack whatever he says.

Palin isn't an economic policy wonk, but she has something better when it comes to economic issues: real Main Street America experience in small business. Most businesses in America are small businesses. She understands them. They speak the same language.

10. ENERGY is the key to the campaign. ENERGY policy is at the intersection of national security, foreign policy and the economy. So... hammer the link between higher energy costs and the struggling economy, and the link between foreign energy dependence and national security, and point out that Obama and the Democrat's opposition to significant increased domestic production of oil, natural gas and oil from shale means we'll continue sending $700 billion a year to foreign countries that don't like us very much. ($700 billion? We've heard that number before...)

Point out with a megaphone that when it comes to increasing domestic supplies of reliable energy, Obama and Biden stand in the way, and while dependence on foreign energy impacts our foreign policy in negative ways it also enriches terrorist-coddling countries like Iran and destabilizing regimes like the one in Russia.

And it damages the domestic economy.

When gas jumped from $2 a gallon to $4 gallon, it cost my wife and myself an extra $400 a month in gasoline costs. Every month that is $400 we don't have to save, or spend on other things, or donate to charity. Imagine that kind of impact to family budgets across the country and you can see why more and more people can't pay their mortgages on time, and why consumer spending is sluggish, resulting in a general economic slowdown and job losses.

Americans overwhelmingly want increased domestic oil drilling. Obama and Biden don't - nor do they support increased use of clean coal or nuclear. They want to risk America's economy on renewables that aren't yet able to produce sufficient quantities of energy, and exotic alternatives that are expensive and won't be technologically ready any time soon. McCain-Palin should also point out that Washington solutions like ethanol subsidies drive the cost of food up, and will contribute very little to energy independence.

McCain's strength is national security and defense issues, not economics. So split campaign message duties - let Palin take the lead on economic issues and on energy issues as they relate to the economy.

She is knowledgeable on more than just oil and natural gas, and has a positive track record on energy issues. Palin - not McCain - should be the face of the McCain-Palin campaign's ads on the economy and energy. She has communication skills approaching those of Ronald Reagan and Bill Clinton. Use them.

There. Ten things the McCain-Palin campaign should do, starting right now, to win this race. It is still very winnable.
Posted by ivarussell

1 Comments:

Blogger smrstrauss said...

Let Palin take the lead on economic issues you say?

What is her policy on credit default swaps (of which there is said to be some $50 TRILLION, but no one knows)?

What is her policy on leverage? How much is legitimate for a bank. How much for an investment bank? When a bank or an investment bank hides assets in off-balance sheet companies, should there be a penalty?

Should social security be made a private investment?

I'd love to hear her answer questions on this. For that matter, I'd like John McCain to answer.

5:32 PM  

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