Mortgages and Elections: McCain
Down to Three Candidates, but Who Is Best for Homeowners?
McCain wants to let the situation sort itself out with little government intervention. This risky strategy could save taxpayers money, but what about homeowners?
The Democratic race continues to be fierce, while the Republican nomination is already decided. One of the hot issues being thrown around the election this year has been the mortgage crisis. Candidates have proposed a variety of economic stimulus packages and mortgage reforms, but just who has the best mortgage plan? Looking at the issues, it’s simply too hard to tell.
John McCain
Sticking with the Republic mantra of lower taxes stimulate the economy, McCain recommends reducing the corporate tax rate from 35% to 25% and a few other corporate tax reductions. That is all. He offers no help to families facing foreclosures and no apologies either. He suggests 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.” While this is a tough stance in the face of an ailing housing market, it has positives and it has negatives.
Economic Stimulus Plan Pros
A major pro to McCain’s plan is that it is cheap and could be effective. Lowering the corporate tax rate by 10% would be a very big boost to the economy. In the 1980s when Reagan did this, the economy took off like a rocket. Unfortunately, this also resulted in a massive deficit, which some will claim is unrelated, but that is a topic for another post.
Most importantly, this tax rate cut would mean more jobs and larger 401ks. The biggest beneficiaries of this would be the upper and middle class, who arguably are being hurt the most by the mortgage crisis. It is very tough to be poor and a homeowner because a home is a very large investment. Additionally, the simple act of owning a home and accruing equity moves many families into the middle and upper class financially.
Finally, many people share McCain’s sentiment for not bailing out or rewarding homeowners who made poor decisions. This has resonated well with his constituents and many Americans who are not facing foreclosure. Foreclosures affect 1-2% of the population, so it stands to reason that 98% of the population makes the right decision when buying a home.
Economic Stimulus Plan Cons
Where is the help for the homeowner and the housing market? Jobs have not proved to be a major issue this economic slowdown, so rewarding the rich with corporate tax cuts seems like a slap in the face to the middle class homeowner who have seen their home equity and perhaps even their life savings wiped away in a few months. While only 1-2% of homeowners ever face foreclosure, vacant homes affect the value of entire neighborhoods. Doing nothing to stem this problem could result in the permanent loss of value for many homes.
Additionally, with cities already overburdened by the care of vacating homeowners, doing nothing only puts more stain on them. McCain’s strategy is the riskiest of the three because by doing nothing he opens himself up to full criticism if things get worse.
