Either a Borrower or a Lender Be: Under John McCain’s mortgage plan, you’d better not be a taxpayer

McCain thus conflated two distinct issues: declining home values and foreclosures. If a home you bought for $300,000 can now fetch only $200,000, that in itself does not affect your ability to make your monthly payment. You may not like paying off a loan that’s higher than the current market value of your house, but that’s the chance you took when you invested in this particular asset.

Under McCain’s plan, neither the borrowers nor the lenders bear the cost of their risky choices. Taxpayers do, to the tune of $300 billion or so—his estimate of the difference between what the government will pay to buy mortgages at their face value and what it will get back at the McCain-discounted value, assuming borrowers who have already shown themselves to be bad credit risks pay off their new loans.

McCain concedes his plan will be “expensive” but says it’s necessary to “stabilize home values in America.” Somehow McCain knows the market price for homes is not the correct price, so he plans to artificially prop up the value of these assets, benefiting one group of Americans at the expense of others. The straight-talking maverick thereby abandons any pretense of fiscal conservatism, devotion to free market principles, or opposition to pork barrel politics—all to restore “some trust and confidence back to America.”