"Obama Attacks McCain’s Mortgage Plan"

NY Times:

This 30-second advertisement for Senator Barack Obama will be shown across the nation on national cable television, according to the campaign. It is titled “Tested.”

PRODUCER Obama campaign media team

THE SCRIPT A narrator says: “In a time of crisis, our leaders’ judgment is tested. On Tuesday, an announcement.” Senator John McCain: “I would order the secretary of the Treasury to immediately buy up the bad home loan mortgages in America.” The narrator: “On Wednesday, the details. McCain would shift the burden from lenders to taxpayers guaranteeing a loss of taxpayer money. Who wins? The same lenders that caused the crisis in the first place. Putting bad actors ahead of taxpayers? We can’t afford more of the same.”

ON THE SCREEN The advertisement opens with still images: a foreclosed home with a “For Sale” sign, a worried stock trader, the Capitol. Then a clip of Mr. McCain’s announcing of his home mortgage plan at the debate Tuesday. The narrator says the plan would “shift the burden from lenders to taxpayers” as a graphic of a CNN Money.com article that reaches a similar conclusion appears on the screen. The advertisement ends with images of a street sign on Wall Street, followed by a photograph of Mr. McCain with President Bush.

ACCURACY Even Mr. McCain’s economic adviser, Douglas Holtz-Eakin, conceded that the plan would place a burden on taxpayers. Under the proposal, the government could buy the home loans of Americans who are at risk of defaulting (or are already delinquent) and allow them to obtain new mortgages at more favorable rates. Taxpayers would be responsible for the difference in value between the old and new mortgages. It is very likely the McCain plan would result in “a loss of taxpayer money,” as the message says.

While the advertisement portrays lenders as the winners in this arrangement, it fails to acknowledge the potential benefits to homeowners, namely more affordable mortgages. Mr. Holtz-Eakin has also noted that stabilizing home values would speed economic recovery. The commercial does not mention the fact that legislation, including the $700 billion bailout bill that Congress and the president approved last week, paved the way for the plan that Mr. McCain proposed. Both Mr. McCain and Mr. Obama supported the bill.

SCORECARD With millions of Americans at risk of foreclosure, Mr. Obama has seized on Mr. McCain’s mortgage proposal as a way to question his judgment on economic issues. While the advertisement glosses over the critical point of the McCain plan — that it is meant to be a lifeline for homeowners before they slide into foreclosure — it makes some valid points about the new liabilities taxpayers would face.

Barack Obama