Reidblog [The Reid Report blog]

From economic experts to political pundits, from liberals to conservatives, the proposal has been greeted with a collective sense of puzzlement that is raising questions not only about the substance of the plan, but of the seeming hastiness surrounding its rollout.

The few details available about McCain’s American Homeownership Resurgence Plan give the impression the plan is “half-baked,” according to Larry Sabato, director of the University of Virginia’s Center for Politics.

“If you’re launching a major new initiative, usually you blitz the cable networks and really try to penetrate the public consciousness. I didn’t see that today,” he said Wednesday.

“It would really frighten me if he actually thought this was good policy,” said Dan Mitchell, a senior fellow at the libertarian Cato Institute. “I assume that it’s nothing but a desperation ploy” to show they are doing something “big and bold,” he said.

“It seems hastily put together … given the lack of detail, specificity and overlap with existing programs,” added a Republican financial services lobbyist.

Indeed, McCain’s announcement was accompanied by a fact sheet that raised almost as many questions as it answered. The campaign did post and e-mail a background document Tuesday night following the debate describing the plan, but it lacked specifics about how the program would work, exactly who would be eligible and how many people would be helped.

... The McCain campaign said the plan did not change and they merely edited out “language [that] was mistakenly included in the initial draft.”

Nonetheless, with the sentence gone, the plan morphed into a shifting of $300 billion worth of losses to the taxpayers. It became clear Wednesday as the campaign talked about the plan that McCain is proposing that the Treasury purchase bad mortgages at face value even though sliding home prices mean many homes are worth far less than what the government would pay for original mortgages.

The plan is to retire the original mortgage and issue the homeowner a new, 30-year fixed-rate loan at interest rates just above 5 percent from the Federal Housing Administration. The shortfall between the new mortgage and the cost of the older, more expensive one would come from taxpayers.

The new detail caused many experts to question whether the $300 billion price tag is too low.

And while the McCain campaign pitched the plan as a fast-acting solution, some experts said that the administration of a homeowner-by-homeowner program would be extremely complicated — and therefore likely slow-moving — and much more cumbersome than dealing with larger institutions.

A campaign conference call with reporters Wednesday morning revealed that the campaign still doesn’t have all the details worked out.

When asked how many people the plan would help, McCain economic adviser Douglas Holtz-Eakin responded that it could aid “literally millions” but they didn’t have a precise estimate. “The question is how many people are going to pick up the phone.”

Holtz-Eakin offered only broadest description of who would qualify for the refinancing program.

“They need to be in a position where they’re going to be unable to stay in the mortgage,” he told reporters, saying that includes a homeowner who is “underwater” in their mortgage — owing more than the home is currently worth — or facing a future rate reset that would make their payments unaffordable.

“We’re going to roll out the specific criteria. We’re trying to get sign-offs from the senator on all the details,” Holtz-Eakin told Politico in a later interview. ...

Labels: 2008 election, desperate Republicans, John McCain, presidential candidates