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The Next President's Plan . . .

The writer, a former director of the Congressional Budget Office, is a senior policy adviser to Sen. John McCain's campaign.

To solve the current crisis, Barack Obama would immediately take three steps, addressing the fact that the troubles ultimately result from the squeeze on ordinary Americans in the "real" economy.

First, he would enact a comprehensive plan to help bring an end to the foreclosure crisis that threatens millions of families. Obama supports efforts to create a new FHA Housing Security Program to provide significant incentives and guarantees for lenders to buy out mortgages that exceed the value of homes and convert them into stable 30-year fixed-rate mortgages that homeowners can afford. This is a responsible plan designed to help responsible homeowners without rewarding borrowers or investors who helped create the problem by gambling recklessly or committing fraud, and it asks both sides to contribute to the solution.

Obama would couple this plan with a direct interest-rate subsidy for low- and middle-income borrowers patterned on the mortgage interest deduction now predominantly used by high-income itemizers, as well as with comprehensive credit counseling, additional aid for loan workouts and reform of the bankruptcy code.

A housing security program would help not just the families and neighborhoods threatened by foreclosure. It would also remove the darkest cloud hanging over the financial system. Resolving this issue would ease the financial crisis and get credit markets lending again.

Second, Obama would make sure that we get money into the pockets of people who need it and invest in sustainable job growth. This would include extending unemployment benefits, getting money to hard-pressed states so they don't have to slash key services, and giving substantial permanent tax relief to seniors and working people -- up to $1,000 per working family -- to help Americans who are struggling in this economy.

It also means enacting Obama's infrastructure plan to fund our desperate need for such investment, an alternative energy and "green" jobs development program, and a job skills program to improve our country's workforce. These can help prevent potentially devastating job losses in manufacturing and construction especially.

Obama's third priority is making sure that a housing crisis like this does not happen again. That means ensuring that we don't reward people -- whether borrowers, lenders or corporate executives -- for bad behavior in the mortgage market. It means installing the responsible oversight of credit markets that has been lacking -- on mortgages, yes, but also on credit cards, which threaten to metastasize into the next version of the mortgage crisis. It also means increasing people's savings so they have something to fall back on when things go wrong; enacting his long-run savings program would give virtually every worker in America a portable pension savings account.

The country's economy and financial system face some serious challenges. Barack Obama is confident we can meet these challenges the way America always has -- by coming together to ensure that our economy works for every working American.

-- Austan Goolsbee

The writer, a professor of economics at the University of Chicago Graduate School of Business, is senior economic adviser to Sen. Barack Obama's campaign.

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