On Wall Street, Obama's Wonk vs. McCain's Words

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This morning, John McCain released an ad called "Foundation" about the current financial crisis. Staring straight into the camera, the Arizona senator pledges to "reform Wall Street and fix Washington." "I've taken on tougher guys than this before," he says, evoking his senatorial scraps and Vietnam service. In contrast, his "opponent"--that would be Barack Obama--offers "talk and taxes" as his "only solutions."

As political messaging goes, "Foundation" is pretty effective. "For my money, this is McCain at his best and the sort of spot that people will respond to," writes Politico's Jonathan Martin. The only problem: the ad assumes that no one's been listening to anything the candidates have actually said since Monday's market meltdown. That's because only one White House hopeful has spent the last few days trying to provide the public with something more material than "talk" to hang on to. And his name isn't John McCain.

One of the most persistent criticisms of this year's Democratic nominee is that he avoids "specifics," preferring instead to prattle on about airy concepts like "hope" and "change" and "unity." This is partly true--Obama does talk about hope and change. But mostly it's false. The problem has never been that Obama is allergic to specifics. He's not. This year's Democratic primary contest was not only the most extensive and intensive in U.S. history--it was also by far the heaviest on policy, with both Obama and Hillary Clinton unveiling dozens of minutely detailed plans on everything from health care to energy over its interminable eighteen month span. It's just that people who weren't paying close attention--and that was most of us--heard Obama chattering about change far more often, and more loudly, than we heard him prescribing policy. Casual voters allot only a tiny corner of their brains to each presidential candidate. Obama filled that space with rhetoric. So he was stereotyped--and, in part, he stereotyped himself--as the guy who was more interested in speeches than solutions (even if his website was chock full of them).  

Which is one of the reasons why I wrote on Monday that the "disastrous news" from Wall Street represents a "huge [political] opportunity for Obama"--an opportunity, that is, to steer the spotlight to his economic plans and policies, which have been largely eclipsed, until now, by his emphasis on oratory. And despite McCain's "all talk" accusation, that's exactly what Obama has done. Now, nothing Obama has said since Monday has been "new," per se. But that's because he's already addressed these problems. On March 27, 2008 Obama unveiled a six-point plan for revamping our financial market regulatory framework; in February 2006 he introduced legislation to combat deteriorating mortgage lending practices. So when he took to the stage at the Colorado School of Mines in Golden Grand Junction, Colo. Tuesday morning to say how he proposes "to restore confidence in our markets and turn our economy around,", he had plenty of specifics to draw on. Take his plan to provide 10 million middle-class homeowners 10 percent off their interest rate through a universal mortgage tax credit, for example. Or the one about giving the Federal Reserve supervisory authority over any financial institution it extends credit to. Or the one about ending our balkanized framework of overlapping and competing regulatory agencies.

The list goes on. The point is, Obama went to great lengths in his speech to get as specific as possible. Since then Chicago has released an in-depth fact sheet outlining Obama's plan and an ad, "Plan for Change" [above], that consists of nothing but the candidate staring straight ahead and soberly explaining his major policy positions. For Obama, this shift to specifics is simply good politics--a way to show a worried country that he's prepared to lead. You can disagree with Obama's proposals--many folks will, whether out of partisanship or principle. But to say, like McCain, that he's offering nothing but "talk" is simply false.

In fact, it's been McCain's response--not Obama's--that's felt a little light on substance so far. Unlike Obama, McCain has never made a priority of calling for increased regulation on investment firms and insurance agencies like AIG. In fact, "he has never departed in any major way from his party's embrace of deregulation and relying more on market forces than on the government to exert discipline," as the New York Times reported on Tuesday. A decade ago, McCain embraced legislation designed "to broadly deregulate the banking and insurance industries, helping to sweep aside a thicket of rules established over decades in favor of a less restricted financial marketplace." Sponsored by top McCain economic advisor Phil Gramm--then a Texas senator--that bill ultimately "helped pave the way for companies such as AIG and Lehman Brothers to become behemoths laden with bad loans and investments," according to the Washington Post. McCain's ideological commitment to deregulation has resurfaced multiple times during the 2008 campaign. Shortly before Bear Stearns collapsed last March, for example, the candidate characterized himself as "fundamentally a deregulator" who's "always for less regulation," and even as AIG faced collapse yesterday, he told Matt Lauer that "we cannot have the taxpayers bail out AIG or anybody else." (He's reversed his position now that the government was forced to commit $85 billion to stop AIG's collapse.)

My point here is not to play a tiresome political game of gotcha. McCain's long-held belief in deregulation is sincere and consistent with his fiscal conservatism. But the current credit crunch has forced him--as both a matter of political survival and rational policymaking--to change his tune. In the past few days, McCain, like Obama, has come out in support of "boosting the regulation of banks, investment banks and other financial institutions" and "tightening the rules on the type and amount of funds financial institutions should hold," as the Wall Street Journal put it. On the stump, he's presented himself as a pugilistic populist and champion of regulation who's determined to "take care of the workers" and remedy the "casual oversight by regulatory agencies in Washington" at the root of the current crisis.

The problem is that because this is such a new posture for McCain, he's yet to back it up with much in the way of specifics. Delivered Tuesday in Tampa, his speech on "reforming our financial markets" devoted only three of its nine paragraphs to actual reforms--and even then, McCain spoke in the broadest possible terms. There will be "comprehensive regulations that will apply the rules and enforce them to the full"; "Wall Street operator[s]" who "abus[e] the trust of the public" will "face the consequences." The closest McCain came to a specific proposal was his promise "reduce the debt and risk that any bank can take on" and "prevent the kind of wild speculation that can put our markets at risk"--laudable goals, but little more than platitudes without actual plans to put in place. Meanwhile, unlike Obama, McCain has not posted any additional information on his website; the senator's economic plan doesn't even mention market reform. "I don't think it's, at this moment, imperative to write down exactly what the plan has to be," Douglas Holtz Eakin, McCain's top economic adviser, said yesterday. "[It's just] some standards we just have to aim for and we just haven't met." In other words, McCain doesn't need any actual policy prescriptions. Framing himself as a vigorous, trustbusting man of action--Theodore S. McCain, perhaps--should be enough.

For the record, there's nothing wrong with McCain's vagueness--in a vacuum. After struggling against his anti-regulatory instincts, he's currently sounding all the right notes on market reform. And it's great that the candidates are finally debating important economic questions, like whether taxes should be raised or lowered on folks making over $250,000 a year. That said, calling Obama's approach "all talk" is simply hypocritical. Right now, it's McCain who's relying on pleasant words to get by--and Obama who's emphasizing his wonky side. Whether anyone is listening closely enough to tell the difference is another story.