A Tale of Two (or Three) Plans

It’s incredible to look at the text of the deal that Dodd and Frank hashed out, that was broadly agreed upon, and that apparently John McCain helped scuttle, () and contrast it with the “plans” that House Republicans presented as an alternative. The Democrat plan is not without flaws, I’m sure, but it has most of the things that progressives have been saying it needs to have: homeowner relief, equity stakes for the government, oversight mechanisms, and a handle on the money spigot. This is about as different from the original Paulson plan as it’s possible to get. It was never going to be everything that progressives wanted, but it seems far better than it could have been.

Contrast that with the Republican plans, of which there seem to be two. The first is little more than a joke: a two year suspension in the capital gains tax – despite the fact that the problem is that the assets these mortgages are backing are worth less now than the mortgages themselves. They don’t need to suspend the capital gains tax, because these assets aren’t going to be making any capital gains. The other is slightly less idiotic, and seems to come down to an elaborate, just as expensive plan that avoids more regulation or Congressional oversight.

These Republicans are fundamentally unserious. They’re trapped by rigid, ossified orthodoxies that prevent them from actually engaging the real world on anything other than the most basic, tactical, political level. They aren’t fit to govern and are simply another example of the idea that when you send people who don’t believe government works to run the government, you just get government that doesn’t work.

Is McCain throwing his weight behind them, or is he trapped in a mavericky labyrinth of his own making? My guess is the later. I can’t imagine anyone who seriously expected to be able to compete in the upcoming election to swing from “the fundamentals of the economy are strong” to “We need more regulation!” to a total abandonment of any sort of regulation. It’s entirely possible that McCain is simply this clueless about what’s going on. After all, it takes the kind of interest in detail, patience and willingness to learn that McCain has never possessed to follow this crisis and come up with a reasonable response.