The Spectacle Blog

McCain and Economic Conservatives

By on 9.18.08 | 3:44PM

McCain may have gained traction among social conservatives by naming Sarah Palin as his running mate, but his emotional and irrational reaction to the crisis on Wall Street risks alienating economic conservatives, and, as far as I'm concerned, it renews questions about whether he has the temperament to be an effective president.

His reaction to this week's news has thus far been to huff and puff about greed on Wall Street, call for a commission to study the problem (very legislator-like), and to make vague promises about tough and aggressive regulation.

At a speech in Cedar Rapids today, McCain began to offer more details, which included firing SEC Chairman Chris Cox, as Quin mentioned.

I just got off of a call featuring Doug Holtz-Eakin, McCain's economic policy adviser, who was asked several times what Cox specifically did wrong that would warrant his firing and what it would accomplish to fire him in the middle of a crisis.

Holtz-Eakin couldn't give a specific answer -- he just kept repeating that Cox (who he did not mention by name) had a "track record that did not meet the standards that John McCain felt appropriate."

Also, he was asked if it mattered that McCain, as president, didn't have the authority to fire a sitting SEC commissioner. Holz-Eakin said McCain would publicly ask him to resign, and thus intimidate him into doing so.

In other words, in seeking to be the anti-Bush (see: "Brownie, you're doing a heck of a job") McCain would move to the other extreme, so that in his administration, anything bad that happens will lead him to scapegoat officials, even if McCain can't point to any specific wrongdoing, and even if it wouldn't do anything to help solve any of the underlying problems.

Also today, McCain's called for a new government agency to deal with the mortgage crisis, which he described thusly:

We cannot wait any longer for more failures in our financial system. Structures like the resolution trust corporation that dealt with the failed savings and loan industry were designed to clean up the system and worked. Today we need a plan that doesn't wait until the system fails. I am calling for the creation of the mortgage and financial institutions trust - the MFI. The priorities of this trust will be to work with the private sector and regulators to identify institutions that are weak and take remedies to strengthen them before they become insolvent. For troubled institutions this will provide an orderly process through which to identify bad loans and eventually sell them. This will get the treasury and other financial regulatory authorities in a proactive position instead of reacting in a crisis mode to one situation after the other. The MFI will enhance investor and market confidence, benefit sound financial institutions, assist troubled institutions and protect our financial system, while minimizing taxpayer exposure. Tomorrow I will be talking in greater detail about the crisis facing our markets and what I will do as President to fix this crisis and get our economy moving again.

Holz-Eakin expanded a bit on this plan, but it doesn't get any better. On the one hand, the idea is to prevent taxpayer bailouts. But on the other hand, he acknowledged during the call that this new government agency would have the backing of Treasury, and therefore, taxpayers. So under McCain's proposal, instead of waiting for companies to be on the verge of collapse to bail them out, government will take all comers.

Anything McCain proposes on the campaign trail will obviously get revised should he become president, but his track record as Senator does not bode well for small government conservatives. He pushed campaign finance reform and voted for Sarbanes-Oxley, over the objection of critics who at the time argued that the legislation would create new problems while not solving what it sought to address. In both cases, the critics have been proved right. But it doesn't matter to McCain, who makes decisions purely on passion rather than reason.

McCain would govern based on his own outrage, and conservatives would be left hoping that at any given moment he's outraged about the same thing as they are.

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