McCain gets lost in the economic fog

Eugene Robinson
Updated on Sep 22, 2008
from South China Morning Post: http://www.scmp.com/portal/site/SCMP/menuitem.2af62ecb329d3d7733492d9253a0a0a0/?vgnextoid=d611bedb0d48c110VgnVCM100000360a0a0aRCRD&ss=Insight&s=Opinion

John McCain was telling the truth when he said that economics wasn't his strong suit. In response to what many economists have called the worst financial crisis since the Great Depression, the Republican presidential nominee has sounded — and let's be honest here — totally, embarrassingly and dangerously clueless.

His now-famous remark about how "the fundamentals of our economy are strong" would almost by itself be enough to justify my assessment. But he committed what was probably an even worse gaffe last Tuesday when, as the insurance behemoth AIG teetered on the brink, he said: "I do not believe that the American taxpayer should be on the hook for AIG. We cannot have the taxpayers bail out AIG or anybody else."

Within hours, the federal government had bailed out AIG to the tune of US$85 billion. Treasury Secretary Henry Paulson — and others who know how Wall Street works — understood that, if AIG were to collapse, much of the financial system might follow.

Senator McCain quickly changed his tune, saying the government was "forced" to rescue AIG because of "failed regulation, reckless management and a casino culture on Wall Street".

That sounds OK, but wait a minute. If he had any idea of what he was talking about — if he had any inkling of how big AIG is, or how central it has become — then why on Earth would he have taken a stand against a bailout in the first place?

Senator McCain released new television adverts last week regarding the economy. "I'll meet this financial crisis head on," he says in one. "I won't tolerate a system that puts you and your family at risk. Your savings, your jobs — I'll keep them safe."

In fairness, Barack Obama has no magic bullet to solve the financial crisis, either. There are differences, though. For one, Senator Obama's proposals for action — a stimulus plan, protection for homeowners in peril of foreclosure, increased regulation — are more specific than Senator McCain's.

For another, Senator Obama blames the crisis on "an economic philosophy that sees any regulation at all as unwise and unnecessary". Senator McCain now calls for better regulation, too. In other words, Senator McCain is running against his own record. To cite one example, he backed landmark legislation in 1999 that removed the walls between banks, investment firms and insurance companies. That bill allowed a company like AIG to expand beyond its traditional insurance business into exotic new products that ultimately brought the company down.

Senator McCain, who told The Wall Street Journal in March that "I'm always for less regulation", now asks voters to believe he will be a champion of tough, unblinking oversight. He's outraged that Wall Street's preening Masters of the Universe threw a drunken toga party and smashed all the furniture — but he helped buy the beer and told the police to look the other way.

This is the man who's going to reform the US economy?

Eugene Robinson is a Washington Post columnist