Sen. John McCain (R., Ariz.) has been working hard to qualify Monday's remarks that "the economic fundamentals are strong" in the U.S. by stressing his faith in the American worker. "I know the American worker is the strongest, the best, the most productive and most innovative," he said.
The economy poses a problem for McCain. His campaign's response to the recent upheaval on Wall Street has lacked urgency, while his support for deregulation and free markets calls into question his commitment to reform. Sen. Barack Obama (D., Ill.) has accused his rival for the White House of being "out of touch," and he might be right.
McCain, struggling to find a solution to the market mess, proposed something surprising: a 9/11-style commission to study the crisis. That seems like a slow solution to a problem requiring immediate attention.
, formed in response to the terrorist attacks of Sept. 11, 2001, held hearings for more than a year and issued a report two years after its creation in 2002. Furthermore, the Bush administration delayed action on many of the panel's recommendations, if not ignored them entirely.
I don't think this was the type of response Americans wants when they're losing their homes and their jobs. In relying on a commission, McCain looks like he doesn't understand the economy. Worse, doing so plays right into Obama's charges that McCain is out of touch.
Obama said Tuesday:
"If you want to understand the difference between how Senator McCain and I would govern as president, you can start by taking a look at how we've responded to this crisis. Because Senator McCain's approach was the same as the Bush administration's: Support ideological policies that made the crisis more likely; do nothing as the crisis hits; and then scramble as the whole thing collapses. My approach has been to try to prevent this turmoil."
McCain has been slow to react. However, Obama isn't correct in all respects. McCain did warn the administration about the potential problems with
when accounting problems surfaced in 2006.
McCain does have ties to the problems in the financial markets. His campaign's economic policy relies heavily on the advice of former Sen. Phil Gramm. Gramm, as chairman of the Senate Banking Committee in the late 1990s, was instrumental in deregulating the financial services industry. The Gramm-Leach-Bliley Act overturned many of the protections instituted after the Great Depression.
Gramm also wrote the Commodity Futures Modernization Act of 2000. The act relieved many financial firms from federal government oversight of futures trading, allowing for the explosion of the
swap market. (See Dan Freed's piece on the complexity of unwinding
risk from its involvement in credit default swaps.) Clearly, Warren Buffett was correct when he deemed credit default swaps "financial weapons of mass destruction."
Gramm parted with the McCain campaign after making unhelpful comments -- such as "We have sort of become a nation of whiners" -- and calling economic conditions a "mental recession."
On Tuesday, another McCain adviser hurt the campaign. Carly Fiorina, former CEO of
, said on
: 'Well, I don't think John McCain could run a major corporation."
Although the federal government isn't a corporation, it does dwarf any corporation in size and scope. The current federal budget stands at about $3 trillion. If McCain can't run a corporation, certainly the federal government is out of the question.
The McCain campaign has got to do better when talking about the economy. If not, he will be seen as "out of touch" and be out of luck come November.