Sen. McCain's remarks on economy today from Santa Ana, CA
from POLITICO MAFIOSO by Tony GOPrano
By John McCain, Candidate for President of the United States
"Thank you for joining me here today. I just returned from a trip overseas that included assessing the state of affairs in Iraq, the Middle East, and Europe. I will have more to say on those important issues in the days and weeks to come.
While I was traveling overseas, our financial markets experienced another round of upheaval. This market turmoil leaves many Americans feeling both concerned and angry. People see the value of their homes fall at the same time that the price of gasoline and food is rising. Already tight household budgets are getting tighter. A lot of Americans read the headlines about credit crunches and liquidity crises and ask: “How did we get here?” In the end, the motivation and behaviors that caused the current crisis are not terribly complicated, even though the alphabet soup of financial instruments is complex.
The past decade witnessed the largest increase in home ownership in the past 50 years. Home ownership is part of the American dream, and we want as many Americans as possible to be able to afford their own home. But in the process of a huge, and largely positive, upturn in home construction and ownership, a housing bubble was created. A bubble occurs when prices are driven up too quickly, speculators move into markets, and these players begin to suspend the normal rules of risk and assume that prices can only move up - but never down. We've seen this kind of bubble before - in the late 1990s, we had the technology bubble, when money poured into technology stocks and people assumed that those stock values would rise indefinitely.
Between 2001 and 2006, housing prices rose by nearly 15 percent every year. The normal market forces of people buying and selling their homes were overwhelmed by rampant speculation. Our system of market checks and balances did not correct this until the bubble burst. A sustained period of rising home prices made many home lenders complacent, giving them a false sense of security and causing them to lower their lending standards. They stopped asking basic questions of their borrowers like "can you afford this home? Can you put a reasonable amount of money down?" Lenders ended up violating the basic rule of banking: don’t lend people money who can’t pay it back. Some Americans bought homes they couldn't afford, betting that rising prices would make it easier to refinance later at more affordable rates.
There are 80 million family homes in America and those homeowners are now facing the reality that the bubble has burst and prices go down as well as up.Of those 80 million homeowners, only 55 million have a mortgage at all, and 51 million are doing what is necessary – working a second job, skipping a vacation, and managing their budgets – to make their payments on time. That leaves us with a puzzling situation: how could 4 million mortgages cause this much trouble for us all?
The other part of what happened was an explosion of complex financial instruments that weren't particularly well understood by even the most sophisticated banks, lenders and hedge funds. To make matters worse, these instruments - which basically bundled together mortgages and sold them to others to spread risk throughout our capital markets - were mostly off-balance sheets, and hidden from scrutiny. In other words, the housing bubble was made worse by a series of complex, inter-connected financial bets that were not transparent or fully understood. That means they weren't always managed wisely because people couldn't properly quantify the risk or the value of these bets. And because these instruments were bundled and sold and resold, it became harder and harder to find and connect up a real lender with a real borrower. Capital markets work best when there is both accountability and transparency. In the case of our current crisis, both were lacking.
Because managers did not fully understand the complex financial instruments and because there was insufficient transparency when they did try to learn, the initial losses spawned a crisis of confidence in the markets. Market players are increasingly unnerved by the uncertainty surrounding the level of risk, liability and loss currently in the financial system. Banks no longer trust each other and are increasingly unwilling to put their money to work. Credit is drying up and liquidity is now severely limited – and small business and hard-working families find themselves unable to get their usual loans.The net result is the crisis we face. What started as a problem in subprime loans has now convulsed the entire financial system.
Let's start with some straight talk:
I will not play election year politics with the housing crisis. I will evaluate everything in terms of whether it might be harmful or helpful to our effort to deal with the crisis we face now.I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers. Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy.In our effort to help deserving homeowners, no assistance should be given to speculators.
Any assistance for borrowers should be focused solely on homeowners, not people who bought houses for speculative purposes, to rent or as second homes. Any assistance must be temporary and must not reward people who were irresponsible at the expense of those who weren’t. I will consider any and all proposals based on their cost and benefits. In this crisis, as in all I may face in the future, I will not allow dogma to override common sense.When we commit taxpayer dollars as assistance, it should be accompanied by reforms that ensure that we never face this problem again. Central to those reforms should be transparency and accountability.Homeowners should be able to understand easily the terms and obligations of a mortgage. In return, they have an obligation to provide truthful financial information and should be subject to penalty if they do not.
Lenders who initiate loans should be held accountable for the quality and performance of those loans and strict standards should be required in the lending process. We must have greater transparency in the lending process so that every borrower knows exactly what he is agreeing to and where every lender is required to meet the highest standards of ethical behavior.Policies should move toward ensuring that homeowners provide a responsible down payment of equity at the initial purchase of a home.
I therefore oppose reducing the down payment requirement for FHA mortgages and believe that, as conditions allow, the down payment requirement should be raised. So many homeowners have found themselves owing more than their home is worth, because many never had much equity in the house to begin with. When conditions return to normal, GSEs (Government Sponsored Enterprises) should never insure loans when the homeowner clearly does not have skin in the game.In financial institutions, there is no substitute for adequate capital to serve as a buffer against losses. Our financial market approach should include encouraging increased capital in financial institutions by removing regulatory, accounting and tax impediments to raising capital.I am prepared to examine new proposals and evaluate them based on these principals.
But I think we need to do two things right away. First, it is time to convene a meeting of the nation's accounting professionals to discuss the current mark to market accounting systems. We are witnessing an unprecedented situation as banks and investors try to determine the appropriate value of the assets they are holding and there is widespread concern that this approach is exacerbating the credit crunch. We should also convene a meeting of the nation's top mortgage lenders. Working together, they should pledge to provide maximum support and help to their cash-strapped, but credit worthy customers. They should pledge to do everything possible to keep families in their homes and businesses growing.
Recall that immediately after September 11, 2001 General Motors stepped in to provide 0 percent financing as part of keeping the economy growing.
We need a similar response by the mortgage lenders.
They've been asking the government to help them out. I'm now calling upon them to help their customers, and their nation out. It's time to help American families.More important than the events of the past is the promise of the future. The American economy is resilient and diverse. Even as financial troubles weigh upon it other parts of the economy hold up or even continue to grow. I have spoken at length in other settings about the need to keep taxes low on our families, entrepreneurs, and small businesses; to make the tax code simpler and fair by eliminating the Alternative Minimum Tax that the middle class was never intended to pay; to improve the ability of our companies to compete by reducing our corporate tax rate, which today are the second highest rates in the world;to provide investment incentives; to control rising health care costs that threaten the budgets of our businesses and families; to improve education and training programs; and to ensure our ability to sell to the 95 percent of the world’s customers that lie outside U.S. borders.
These are important steps to strengthen the foundations of the millions of businesses small and large that provide jobs for American workers. There is no government program or policy that is a substitute for a good job. These steps would also strengthen the U.S. dollar and help to control the rising cost of living that hurts our families. These are important issues in this campaign and the debate with my Democrat rivals. But I will get my chance to talk further another day. Now I look forward to hearing from our small business owners – the very lifeblood of our economy."
The Bush Administration has been so disastrous, and Republican
Congressional rule so complicit and corrupt, that it seems to follow, "as the
night the day", that the Democrats must take over just to staunch the
bleeding.
But, what have the Democrats done to show they would do better? Where
is the leadership? Rather than cut funds for the Iraq War, and put the onus on
the commander-in-chief to insure the safety of the troops with funding
withdrawn, they capitulated. There are more troops in Iraq today, spending more
US tax dollars, than there were when the Democrats won back Congress in November
2006. More US servicemen and women lost their lives in 2007 than in any prior
year. Not exactly a leadership record to run on. Many excuses, but no
results.
Because of the unusual situation presented by the Democratic
nomination, Democratic Party leaders have a clear opportunity to show they can
lead. Will they take it? Are they capable? That's what the next few weeks will
determine.
As I understand it, the Clintons plan to do very well in the remaining
primaries, and then develop an argument for their nomination. Argument? My
middle school civics taught me that elections make choices, not arguments.
But, here's an argument: Bill Clinton was in 3rd place, behind both
George HW Bush and Ross Perot, going into the 1992 convention. So, what is the
"argument" for superdelegates to divine who will win the November election from
August polls?
There are 3 potential outcomes to the Presidential nomination race.
Following a protracted, scorched-earth battle, either Hillary or Obama wins the
nomination. Each of those two outcomes provides McCain a likely victory. Equally
importantly, it will have shown--again--that Democrats have a genetic disability
to lead.
The third potential outcome is that Obama wins the nomination within a
few weeks. Yes, that means that Hillary drops out. No further scorched earth. No
financial exhaustion of donors. Time to build a consensus. Time to take on John
McCain.
A dream? Certainly, if the assumption were that Hillary would awaken
one morning, realize her path to the nomination is a pyrrhic victory at best,
and decide to do something not only for her party, but for progressive policies.
Hillary Clinton is no Lou Gehrig---taking himself out of the lineup "for the
good of the team".
Nor should she should be blamed. Our political system is not organized
to enable such a selfless act. Consider all the people who have hitched their
wagons to a Hillary victory, not to mention people like Mark Penn who are
vacuuming in millions of dollars from her continued campaigning---all will be
assuring her that the path to her nomination is real, and that they will deal
with the implications for the general election when they get there.
There is,
however, an alternative. It is called leadership.
At one point during another Republican scandal, Watergate, Barry
Goldwater reportedly went to the White House and told Nixon, "it's over". Soon
thereafter, Nixon's remaining support in Congress eroded, and the wheels were
set in motion for Nixon's resignation.
Superdelegates are a diffuse group of
people, scattered around the country, who do not act in unison nor do a few
here-or-there carry much weight.
There is, however, a subset of superdelegates ("SuperDuper Delegates")
that do have such clout. Like Barry Goldwater for the Republicans, there are
major Democratic leaders, Hillary supporters, who could go to Senator Clinton
and say, "it's over".
I do not underestimate how uncomfortable such a meeting
would be. These people are colleagues, and future colleagues, of Senator
Clinton. Many, like Bill Richardson, worked with the Clintons in the 1990s.
Moreover, for them to say "it's over" to Hillary is to change their own
position, and thus to appear as if they are fair-weather friends.
All true, if the key question for the SuperDuper delegates ought to be
their personal loyalty to Hillary. It is not. Hillary had her run, she was
inevitable, but, absent a scorched earth campaign that would make it unlikely
for any Democrat to win, she has lost it.
The SuperDuper delegates should run
through the scenarios in their own minds of a Democratic party united now,
getting its act together for the fall election, and beginning a decade or two
rule for progressive politics. We will be able to run against George Bush for
two generations---and the Republicans know it!
But, that will not happen if they sit idly by, knowing the hard
reality, and do nothing. Right now, they want others to do something.
The question for the SuperDuper delegates is leadership. It is tough,
but they were not elected to make easy decisions, or to allow events to play
themselves out so that they would not have to make the decisions. If that is all
they do, why do we need them? Why would we follow them?
It is their job, as
leaders, to recognize likely outcomes, weigh chances vs. alternatives, and to
take action before mutually destructive behavior occurs. Show they can make some
uncomfortable, but necessary, decisions.
Or ... (my thoughts now) will McCain win either way, and a contested democratic convention will be a chance to teach out kids what a convention is and how it works.
Washington Times March 21, 2008
By John Boehner (got the alert from John Boehner on Twitter)
House Republicans have taken a stand against wasteful Washington spending by calling for a complete freeze on all "earmarks" and pork-barrel projects. While our challenge has largely fallen on deaf ears — House Speaker Nancy Pelosi, California Democrat, could shut down the earmark process tomorrow if she wanted to — our cause has a strong ally in Sen. John McCain.
Mr. McCain has been a leader in the quest to end pork-barrel spending and has led by example — the senator, like myself, doesn't request earmarks. He strongly supported a one-year moratorium on all earmarks in the U.S. Senate. And as president, Mr. McCain has promised that any "earmarked, pork-barrel bill that comes across my desk, I'll veto it."Mr. McCain's opposition to wasteful spending is a breath of fresh air to taxpayers who foot the bill for congressional spending sprees.
Americans aren't interested in paying for teapot museums, peanut storage and "monuments to me," where congressmen name buildings and other projects after themselves. And with families feeling the pinch of high gas prices and skyrocketing health care costs, they're certainly not interested in tax increases. Not surprisingly, Mr. McCain's Democratic opponents have quite a different record on spending.
In 2007 alone, Sen. Hillary Clinton, New York Democrat, earmarked $340 million in taxpayer dollars. Sen. Barack Obama, Illinois Democrat, earmarked more than $91 million. As recently as last week, both campaigns refused to disclose their full list of earmark requests.The pressure finally got to Mr. Obama, who released his 2005-06 earmark requests on March 13. His requests include $1 million for a hospital where his wife served as vice president of community and external affairs. (Where his wife also go a huge pay increase in the same year)
While Mrs. Clinton continues to decline demands that she make her requests public, one nonpartisan watchdog group says the senator landed 360 earmarks from 2002 to 2006. In 2007, Mrs. Clinton admitted to seeking funding for a hippie museum in Bethel, N.Y. Her spokesman has stated flatly that Mrs. Clinton is "very proud" of her earmarks, which cost taxpayers more than $2.2 billion.Both Mrs. Clinton and Mr. Obama received poor marks on the Club for Growth's 2007 report on pork-barrel spending and government waste. Mr. Obama received a score of 33 percent for his votes against anti-pork legislation, while Mrs. Clinton scored even worse: 11 percent.
Another group dedicated to protecting tax dollars, Citizens Against Government Waste, echoed the Club for Growth's poor rankings. They gave Mr. Obama a lifetime rating of 22 out of 100. Mrs. Clinton received a lifetime rating of 10 out of 100. In other words, taxpayers beware.Last week, Mrs. Clinton and Mr. Obama both voted for the Democrats' $3 trillion budget that included the largest tax increase in American history. According to the Associated Press, the budget would raise income taxes "on individuals making as little as $31,850 and couples earning $63,700" to pay for more wasteful spending.
In fairness, Mrs. Clinton and Mr. Obama followed Mr. McCain — and other fiscal conservatives — and signed on as "11th hour cosponsors" of his proposed earmark moratorium.I know what you're thinking: Why would two Democrat senators — who have fed at the trough as much as anyone — suddenly support a one-year ban on all pork? Simple: They understand that taxpayers oppose pork-barrel spending, and they'll say anything to get elected.Americans aren't going to buy it. They know that Washington spending is out of control and dramatic change is needed to fix it.As the year goes on, voters will find out who is really serious about fixing Washington and reforming how taxpayer dollars are spent. Consider that one party is calling for a complete freeze on wasteful pet projects and for a balanced budget that doesn't raise taxes, while the other is raising taxes and refuses to curb wasteful spending.Which really represents an attempt to fix Washington? Which represents the status quo?
I think the answer is clear.House Republicans recognize that the failure to control spending helped cost our party the majority. We've learned our lesson, and our nominee for president is the one with the record and the commitment to working with us to eliminatewasteful Washington spending once and for all.The election-year posturing of Mrs. Clinton and Mr. Obama is another example of why neither candidate is fit to be president.
Come November, voters are sure to embrace John McCain's positive vision of freedom, security and an end to wasteful spending.
House Republican Leader John Boehner represents Ohio.
For another, Obamas people hate clinton people. I was at Hillary rally
today…and it seems like Hillary supporters aren’t very fond of Obama either. I
heard one person say they would vote for McCain before Obama because of
experience.
terryannonline on March 3, 2008
"I know the very day that I became a McCain supporter. It was a week or two
before Supertuesday, and he said that if it were up to Democrats, either Saddaam
would still be in power, or Al Qaeda would have beaten us on the battlefield in
Iraq and would have a huge propaganda victory there, as well as control of the
country."
