Let Them Eat Their Losses

Daniel Gross, like most everyone else, is unimpressed with John McCain's economic policies:

Staying on Bush's Course Here's some straight talk: McCain's fiscal program is either a joke or a fantasy, by Daniel Gross, Slate: In the last week, the three remaining presidential candidates made big-picture economic speeches.... Barack Obama ...[and] Hillary Clinton ... have remarkably detailed (and remarkably similar) platforms on how to attack the various economic woes facing America. ...

Unfortunately, the brains behind [John McCain's] economic operation seems to be former Sen. Phil Gramm, the Texas A&M economist-turned-senator... And the sections on McCain's Web site about domestic policy reveal, as Matt Yglesias noted, "a nearly astounding level of vacuity."

Reading McCain's economic agenda and listening to his speech, it appears that the problem with the last eight years is that we haven't seen enough tax breaks for the wealthy, that economic royalism hasn't been pursued with sufficient vigor, and that the middle and working classes haven't been stiffed sufficiently.

McCain wants to extend the Bush tax cuts, which he once opposed as a needless sop to the rich in a time of war. (I await David Brooks' inevitable explanation of how opposing taxes in a time of war in 2001 and 2003, when deficits were low, but supporting them in 2011, in a time of war and high deficits, is deeply moral and admirable.) But McCain wants to see Bush's tax relief and raise it some. ... "In all, his tax-cutting proposals could cost about $400 billion a year, according to estimates ... by CBO and the McCain campaign," the Wall Street Journal reported. And how to make up for the lost revenues? Hmmm. McCain promises to cut earmarks; to eliminate waste, fraud, and abuse; and to reduce the projected growth of Medicare; but he won't provide many numbers. ... Essentially, McCain wants to cut revenues by about 15 percent from current levels, with nothing close to that in spending reductions... Here's some straight talk: McCain's fiscal program is either a joke or a fantasy.

McCain's housing speech ... provided a good description of the problem. But his solution to an era in which financial deregulation set the stage for federal bailouts, rampant speculation, and reckless lending is ... less regulation. ...

For McCain, ... [p]oor decisions should not be rewarded—unless those poor decisions are made by really rich people who run investment banks and hedge funds. While "those who act irresponsibly" shouldn't be bailed out as a matter of principle, it's OK to take extraordinary measures to help banks prevent "systemic risk that would endanger the entire financial system and the economy." Obama and Clinton—and the Bush administration...—have argued that it might be possible to spare further systemic risk if something were done to buck up the fortunes of homeowners. Bollocks, says McCain. People should just put up more money for down payments and work harder to keep current with their mortgage payments. ...

At a time of rampant economic insecurity and low consumer confidence, at the end of a business cycle in which median incomes didn't rise and the percentage of working people with health insurance fell, McCain won't succumb to the easy temptation of saying that government policy can help improve the situation. But smart politics? I wonder. What's left of the Republican Party is becoming increasingly downscale, and many swing states have been ravaged by the housing crisis (Nevada, Florida) and globalization (Ohio, Michigan). Besides, he's already got the let-them-eat-cake vote sewed up.

Update: From Paul Krugman:

The Gramm connection, by Paul Krugman: Aha: the Politico notices that Phil Gramm, McCain’s economic guru, can also be viewed as the father of the financial crisis.

The general co-chairman of John McCain’s presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today’s economic turmoil. ...

According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and Treasury Department about banking and mortgage issues in 2005 and 2006.

During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by   lenders and brokers to place homeowners in high-cost mortgages

Where have I seen that before? Ah:

His chief economic adviser is former Senator Phil Gramm, a fervent advocate of financial deregulation. In fact, I’d argue that aside from Alan Greenspan, nobody did as much as Mr. Gramm to make this crisis possible.

Seriously, the Gramm connection tells you all you need to know about where a McCain administration would stand on financial issues: squarely against any significant reform.