This was not a good week for John McCain. When it comes to matters economic, it's become clearer and clearer that his instincts are not well honed. When it comes to national security and foreign affairs, he's at his best when shooting from the hip and talking off the cuff. Letting McCain be McCain in those areas is smart and pays big dividends on the trail.
But when it comes to economics, we need McCain to be someone else. Someone with a firm grasp on the situation and a sound philosophical approach on how we should move ahead. Someone needs to be whispering in his ear and feeding him ideas. It's a real shame that Phil Gramm was let go for daring to speak too freely as he fit the bill quite nicely.
Because if the best McCain can come up with is finger pointing and populist demagoguery directed against Wall Street, it's going to cost him the election. In these areas--and others such as spending and regulation--the more the Republicans try to up the ante, the more they end up looking like pale imitations of their Democratic counterparts. Republicans will never be able to promise enough spending and regulation. The Democrats will always promise more. McCain can point fingers at the SEC chairman and attack Wall Street all he wants. But that will only serve to strengthen Obama's hand. Because in the minds of the voters, if those really are the problems, it's better to get the real deal solution rather than a watered down version of the same.
There is opportunity for McCain in this latest financial crisis. Kimberly A. Strassel lays out one possible approach in today's Wall Street Journal:
"I come today to speak on behalf of the forgotten man, and that includes some 50% of Americans that either own their home, or are renting . . . the 95% of homeowners that are making their payments on time . . . the 99% of Americans that did not behave irresponsibly . . . that ultimately will pay the price for this bill."
John McCain? Dream on. Those were the words of Florida Rep. Tom Feeney in May, as the House considered a housing bailout. If the flustered McCain campaign is looking for pointers on how a principled conservative can politically weather a financial storm, it might make a study of this Sunshine State Republican.
Especially given Sen. McCain's misguided response to this week's financial meltdown. Taking a cue from Hillary Clinton, he's gone populist, railing against "failed regulation, reckless management and a casino culture on Wall Street." He's offered no other explanation for how the U.S. got into this mess. He's signed on to pretty much every Washington bailout.
Mr. McCain has, in short, yielded to every temptation faced by a Republican in a financial crisis. Government largely created this mess, yet in a bid to look proactive he's calling for more government. Markets by necessity have winners and losers, yet he feels the need to offer aid to Americans who made bad bets. Voters are intelligent enough to have a serious financial story explained to them, yet Mr. McCain blames Wall Street.
The American people are not stupid. They know that what happened in the housing and financial markets in the last eight to ten years was that people got greedy on easy money. Sure there was greed on Wall Street. But there was plenty of greed on Main Street too. Plenty of people who bought houses they couldn't afford. Plenty of people who didn't want to know what the real risks they were entering into were.
Now it's the time of reckoning. It's time for everyone, the government, Wall Street, and Main Street to fess up and take responsibility. The government has been spending too much and for a long period of time was lending too freely. McCain should focus on this and run with it. He should promote fiscal responsibility and a sound monetary policy. He should talk freely about how the Fed's low interest rates contributed to our current mess and how the weakness of the dollar has hurt American consumers.
But he shouldn't promise any easy solutions. He should talk realistically about the pain that's necessary to get through this. Some people will lose their homes. Some people will lose their jobs. Some companies will go bankrupt. Some stocks will become all but worthless. The government can not and will not be able to prevent this. He should explain when he thinks it's appropriate for the government to act and when it isn't and why.
It would be a bracingly honest approach that would carry risks. But one of McCain's strengths is his heartfelt patriotism and dedication to national service. He could use this in the economic arena by rallying the country with a new economic message of responsibility and reform. We all need to take appropriate responsibility for the financial troubles we now face and push for reforms to try to avoid them in the future. Most of all his message should be that the days of easy money are over. For everyone.