So yesterday, McCain unveiled a new response to the housing crisis. (Tracking McCain's evolving economic policies isn't just enlightening; it's downright entertaining.) I posted my thoughts on his last proposal, and I thought I'd follow up with a post on his latest speech. There are a host of problems raised by the details of his proposal, but we'll save that for another day. For now, I want to focus on the big picture, because it's all too easy to lose sight of what's really going on here.

The Wall Street Journal argues that:

Sen. McCain's new plan, combined with a recent White House overture in the same direction, may mark a turning point in the Washington debate over how to help more than 10 million homeowners who owe more on their houses than the property is worth. For weeks, the question has been whether the federal government should act to help them. Now the question seems to be how big the package should be and how such a complex new program would work.

Well, that's one way of looking at it. Perhaps what we have is a consensus about strategy and a dispute about tactics. That's certainly how Bush, McCain, and the GOP would prefer to frame the debate: We all want to help, it's just that Democrats want to waste money and reward speculators, and we want to limit help to the deserving.

But it's worth remembering that the brilliance of Rovian politics lies in its ability to rhetorically embrace popular positions even as it works to undermine them. So, in the tradition of Clear Skies and Healthy Forests, we bring you John McCain's HOME plan, guaranteed to help "every deserving American family or homeowner"! 

The problem, as one TPM reader pointed out, is that among those 10 million families and homeowners, McCain thinks that somewhere between 1 in 25 and 1 in 50 are deserving. And that's if you credit his adviser's optimistic estimates. The Frank-Dodd plan, by contrast, is aimed at helping 1-2 million borrowers - as many as half of all the borrowers currently delinquent in their payments, and perhaps ten times as many homeowners as McCain would assist. Let me repeat that. McCain wants to help a few hundred thousand, most of whom already qualify for aid under existing state and federal programs; Democrats propose helping millions, almost all of whom do not. Calling that a dispute over "how big the package should be" is tantamount to saying my house is just like Versailles, only smaller. They're fundamentally different because of their scale; that's the whole point!

Let's be crystal clear about what's going on here. Two weeks ago, McCain stood up and announced that if millions of Americans are struggling to hold onto their homes, they need to work second jobs, take fewer vacations, and tighten their budgets. In fact, he suggested, they have no one but themselves to blame for their present predicament, and shouldn't go looking for government assistance. Not only was that disastrously bad economic policy, it was also a stunningly tone-deaf position to take. Senator Mel Martinez, a crucial McCain supporter, took the trouble to say that McCain's speech "fell short," and that "we need to do some things that can help families, that can help people.” It was clear to McCain, and to those around him, that his penchant for straight talk had not served him well here - that his position was so extreme, and so unpopular, that the blunt truth was political poison.

So McCain took yet-another crack at economic policy. This time, he thundered that "priority number one is to keep well meaning, deserving home owners who are facing foreclosure in their homes," even if that takes government intervention. It's what the public wants to hear. Virtually all of those ten million American homeowners consider themselves well meaning and deserving - when they hear the speech, they assume McCain's talking about them. Of course, whether we label this a refinement or a reversal, it's not much of a change. The rhetorical shift is enormous - McCain has now assumed a posture that is compassionate and proactive. But the policy shift is negligible: he used to think that 10,000,000 homeowners should be left to their own devices, even though millions of them may suffer foreclosure; now he wants to cut loose 9,600,000, give or take. Color me unimpressed.

But it's even more of a sham than it initially appears. The HOME Plan, McCain's bold new initiative unveiled on Thursday, is a near facsimile of the expanded FHA Secure plan the Bush Administration announced on Wednesday. There are a handful of differences, and they're important - they're the reason why the Bush Administration expects their plan to help some 100,000 additional homeowners, fewer than McCain claims his would reach. In practice, though, the difference in the impact of the two plans isn't likely to be nearly so great, since both estimates are inflated. The key point is that McCain's much ballyhooed "reversal" amounts to a retroactive endorsement of something that was announced the day before.

But wait, it gets better. Because it turns out that not even John McCain can keep track of his constantly evolving positions on the mortgage crisis. Two weeks ago, he inveighed against bailouts. Then he denounced the Dodd-Frank proposal as a bailout, because it would refinance troubled loans and write down their value. Over the weekend he applauded the bipartisan reform package that was passed yesterday in the senate, but in his Thursday speech he again hailed those efforts before proceeding to denounce, one by one, virtually all of the bill's provisions. Finally, he announced his own plan to refinance troubled loans and write down their value. Confused? So is he.

I suppose all of this could be viewed as a strength - McCain is once again demonstrating his heterodoxy, and his willingness to adapt his positions to changing circumstances. Of course, we could also label it a flip-flop. But what's really going on here is some shameless duplicity. John McCain discovered that his actual position on an issue was unpopular, and so he's put forward a fig-leaf to provide political cover. Now, when the issue's raised, he can simply reply that he hopes to help every deserving borrower. That his plan still amounts to sitting on his hands is almost immaterial; very few voters are going to dissect the competing proposals in all of their mind-numbing detail. This disguises the fundamental policy dispute between McCain and his rivals. John McCain believes that the market will correct itself, and that government intervention should be limited in every way possible, so as not to interfere with the proper distribution of pain. His rivals believe that non-intervention is likely to produce a devastating downward spiral, as millions of foreclosures drag the entire economy into a needlessly deep and prolonged recession. They propose, instead, restrained intervention to apportion the costs of failure in such a way that the damage to the overall economy is limited. That, in a nutshell, is the difference between aiding a few hundred thousand and aiding millions - the former proposal aims to help a few "deserving" borrowers, but not the economy as a whole; the latter helps borrowers, even some of the less deserving, so that the economic damage to the rest of us will be limited.

Some people are denouncing McCain's new position as a reversal, and to be sure, it is. But ask yourself which attack is more likely to be effective: That McCain has changed his public stance to reflect the desires of the American people? Or that McCain says he's now prepared to help the millions of Americans who are struggling to say afloat, but really, he still thinks they brought it on themselves, and he isn't going to lift a finger to help almost any of them?

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