Monday, March 24, 2008
To solve the current crisis, John McCain would shore up the foundations of the companies, growth enterprises and family businesses that are the source of jobs for our nation's workers. Spending by households and businesses is slowing, leading to job losses. Looming over daily market volatility, the mortgage crisis and the widespread credit crunch is the specter of inflation, especially in gasoline and food prices. To address these challenges, McCain would combine immediate help with reforms that ensure that American families will be protected from such threats in the future.
No government program is a substitute for a good job, and fast job growth requires easing employers' burdens. The most obvious cost is taxes; McCain would oppose Democrats' plans to impose damaging tax increases. He would improve our international competitiveness with a tax credit for research and development, investment incentives and a lower corporate tax rate. He would propose comprehensive health-care reforms that would change the practice of medicine to reward quality, high-value care, as well as tax credits and insurance market reforms to stop the erosion of health insurance. Such a combination would attack spiraling costs, ease pressure on family budgets, permit firms to pay better wages and reduce the number of the uninsured. His commitment to low taxes, controlling government spending and honoring international agreements would reassure investors and strengthen the dollar, helping to ease inflation and oil prices that are hurting American families.
Unemployment insurance and training programs are "automatic stabilizers" that help to minimize economic downturns. But today's programs are straight out of the 1950s. We must modernize unemployment insurance and training programs to create an effective system for helping displaced workers make ends meet and quickly move on to the next opportunity.
John McCain will not play election-year politics with the mortgage crisis. In evaluating any proposal, he will apply four principles: (1) No taxpayer dollars should bail out real estate speculators or financial market participants who failed to do due diligence in assessing credit risks. (2) Any financial assistance should be accompanied by reforms that ensure that we never face this problem again. (3) Too little equity -- small down payments by home buyers and too little capital at our financial institutions -- was a source of the housing and credit problem that must be reversed. (4) Where government assistance is merited, lenders and homeowners should make financial sacrifices to qualify.
The financial markets are suffering the after-effects of the bursting of a housing bubble. As with the technology bubble of the late 1990s, much of the difficulty has been created by speculators looking for quick profits and by investors and bankers who ignored basic rules of risk management in an attempt to cash in while times were good. John McCain will not dip into pockets on Main Street to reward these people with a bailout. He is committed to reforms that will restore economic freedom, opportunity and rising prosperity to hardworking families.
-- Douglas Holtz-Eakin
The writer, a former director of the Congressional Budget Office, is a senior policy adviser to Sen. John McCain's campaign.