Raymond Richman       -       Jesse Richman       -       Howard Richman

 Richmans' Trade and Taxes Blog

McCain's economic advisors cost him the Presidency and may cost him his Senate seat
Howard Richman, 2/26/2010

A February 22 interview with the Arizona Republic editorial staff (Sen. John McCain: I was misled on bailout) shows that Senator McCain still doesn’t understand that his economic advisors' lack of common sense cost him the presidential election. They made four huge mistakes.

Mistake #1, The TARP Bailout

The American people have enough common sense to recognize a give-away to Wall Street lobbyists. Yet McCain voted for TARP, suggesting that his anti-lobbyist rhetoric was phony.  Dick Morris and Eileen McGann noted at the time that McCain's TARP position may have cost him the presidency. 

But McCain still doesn't understand his mistake. In his interview with the Arizona Republic editorial staff, he claimed that Paulson and Bernanke misled him about how the TARP money would be spent. But he again defended his vote, citing his economic advisors:

"Something had to be done because the world's financial system was on the verge of collapse," he said. "Any economist, liberal or conservative, would agree with that. The action they took, I don't agree with."

It is true that something had to be done. But McCain's advisors failed to inform him that something had already been done. By the time that the vote on TARP occurred, the Federal Reserve had already restored liquidity to the U.S. economy. The TARP money was never spent as advertised, because it was never needed.

Now, McCain is trying to distance himself from the TARP vote because it has become a major issue in the primary election for his Senate seat:

Republican Senate primary challenger J.D. Hayworth is using the TARP vote as a bludgeon against McCain's reputation as a fiscal hawk. Tea partyers point to it as the start of a new explosion of federal spending that has continued into the Obama administration.

Mistake #2. Cap and Trade

The American people have enough common sense to realize that recent winters and summers have been cooler than those a few years ago. But President McCain made cap-and-trade advocacy, to fight global warming, a centerpiece of his program. If he had been elected, his support for a cap-and-trade would have made sure that an economically-harmful bill passed.

Senator McCain should have switched to Sarah Palin's common sense policy of encouraging drilling for inexpensive energy sources, including Bering Straight natural gas and Alaskan oil. Inexpensive energy reduces business costs, helps America’s trade deficit and enhances American incomes. In contrast, cap-and-trade would raise the costs to American businesses and make American products less competitive in the international market place.

Mistake #3. Neglecting Savings

Since October 2008, the United States has been in the midst of a financial crisis caused by excessive debt. The American people can no longer borrow more and more on their homes to pay for exports, without the equivalent income that would come from balanced imports. Common sense says that when you are in the midst of a debt crisis, you save. That common sense was tapped by Governor Palin in the Vice President’s debate. According to a Fox News focus group this was the moment when Governor Palin connected best with the American people. She said:

(L)et's commit ourselves just every day American people, Joe Six Pack, hockey moms across the nation, I think we need to band together and say never again. Never will we be exploited and taken advantage of again by those who are managing our money and loaning us these dollars. We need to make sure that we demand from the federal government strict oversight of those entities in charge of our investments and our savings and we need also to not get ourselves in debt. Let's do what our parents told us before we probably even got that first credit card. Don't live outside of our means. We need to make sure that as individuals we're taking personal responsibility through all of this. It's not the American peoples fault that the economy is hurting like it is, but we have an opportunity to learn a heck of a lot of good lessons through this and say never again will we be taken advantage of.

Senator McCain should have jumped on this popular issue, which happened to have been the correct solution to a problem caused by too much debt. He should have started advocating tax changes, such as the FairTax, that would have encouraged American savings. Instead he completely ignored this huge issue.

Mistake #4. Unilateral Free Trade

The American people understand that it makes no sense for America to give away its industry to the Asian mercantilists, but President McCain's advisors were clueless. In January 2008 McCain told Republican primary voters in Michigan that their "jobs aren't coming back." In late April, McCain stood before a shuttered Youngstown Ohio factory and asked voters to reject the "siren song of protectionism." The following exchange about Asia was the moment when McCain lost the final presidential debate:

OBAMA: ... (W)e should enforce rules against China manipulating its currency to make our exports more expensive and their exports to us cheaper. And when it comes to South Korea, we've got a trade agreement up right now, they are sending hundreds of thousands of South Korean cars into the United States. That's all good. We can only get 4,000 to 5,000 into South Korea. That is not free trade. We've got to have a president who is going to be advocating on behalf of American businesses and American workers and I make no apology for that.

SCHIEFFER: Senator?

MCCAIN: ... Now, on the subject of free trade agreements. I am a free trader. And I need -- we need to have education and training programs for displaced workers that work, going to our community colleges.

Since becoming President, Obama has followed McCain's unilateral free trade policy. But that doesn't excuse McCain. He and his economic advisors failed to show any common sense whatsoever on this issue. Not only did this position cost  McCain the midwest, but it was foolish from the standpoint of the American economy.

Our country desperately needs to stop the giveaways to lobbyists, to encourage the exploitation of inexpensive energy sources, to encourage domestic savings, and to demand balanced trade with China. Future Republican presidential candidates desperately need economic advisors with common sense.

Comment by Howard Richman, 2/27/2010:

Whoops, by mistake I erased somebody's comment. Please post it again. Sorry!

Comment by Zbigniew Mazurak, 2/28/2010:

These flawed economic policies and McCain's economic advisors certainly cost McCain the White House. But there were 2 factors that influenced voters even more heavily than McCain's economic policies:

1) President Bush tarnished the GOP's reputation (maybe even irreversibly), so the 2008 election would've been an uphill struggle for any Republican.

2) For 90% of Latino voters, immigration law is either "somewhat important" or very important. Of course, the vast majority of Latinos believe that immigration laws should not be restrictive. Yet, McCain pandered to anti-immigrant extremists like Pat Buchanan and Tom Tancredo, and said that he wouldn't sign HIS OWN IMMIGRATION LAW BILL if it was sent to his desk by the Congress. Aggravating the situation was El Rushbo, who called Mexicans "stupid and unqualified". Given those facts, it's hardly surprising that 67% of Hispanic voters voted for Obama (thus yielding to him swing states like FL, CO, NM and NV) and only 29% of Hispanics voted for McCain. The truth is that NO Republican will ever be elected President (regardless of his economic policies) unless he adopts a pro-immigrant policy and starts courting Hispanics. Latino voters account for 41% of the population of NM, 20% of the population of CO, a large percentage of the population of FL, and an increasing percentage of the population of NV, CA, AZ and TX. No presidential candidate will win an election without them. Of course, extremist racist groups like the FAIR and the CIS will tell you that immigration law policy played no important role during the 2008 campaign, but they're lying.

Response to this comment by Howard Richman, 2/28/2010:
I agree with your first point, that President Bush had damaged the GOP tremendously. But both Bush and McCain drew their economic advisors from the same pool. I wrote a blog entry once about Bush's economic mistakes. You can find it on this blog as the January 5 2010 posting.

Comment by Gone_Rogue, 2/28/2010:

At first I was going to take this article seriously, until the author mentioned Sarah Palin as an "expert" on the economic issue.  And then I realized that this entire article is share and utter poppy-cock.

Response to this comment by Howard Richman, 2/28/2010:
Sarah Palin's natural gas pipeline from Alaska into Canada may be the only positive economic accomplishment, so far, of the Obama administration.