Obama's March To Socialism (3)

This is part three of a three part series. Read part one here, and part two here.

It is not smart to revile and condemn a president who is not only very popular, as Barack Obama is, but who is also as deft at deflecting anger. (Watch for example Obama's easy outmaneuvering yesterday of John McCain’s comments about cost over-runs on the presidential helicopter fleet.)

Republicans will get nowhere by hurling epithets at President Obama. We need to remember instead that we have an appointment with the voters in November of 2010 and again in November 2012. It’s our job now to build our case in advance of that meeting as to why voters should trust us to manage the economy in future. The best way to build that case is by offering better alternatives than the Democrats can do.

On the stimulus we had a better alternative: the payroll tax holiday. Unfortunately, instead of stressing that simple, powerful and effective idea, we committed ourselves to a grab bag of complicated and difficult to explain tax breaks – our own depressing mirror image of the congressional Democrats’ instinct to use a crisis to pay off their favored constituencies.

Now here is our chance again. On the financial crisis, we should be offering our own narrative of what has gone wrong – and a better plan for recovery.

Larry Lindsey has proposed one powerful idea already.

The government should offer the option of a new mortgage to everyone now holding one, be it from a Government Sponsored Enterprise like Fannie Mae and Freddie Mac, a bank, or a mortgage broker. The principal amount would be the same as the existing mortgage. If the home-owner had two mortgages or a home equity line, they could all be rolled together into one new 30-year fixed rate mortgage. The new mortgages should have a substantially lower interest rate than existing mortgages. I suggest 4 percent, but the rate could be slightly higher without affecting the program.

The new mortgage would have one very significant difference: It would be a full recourse loan. That is, if the borrower fell behind in the payments, the government could use any means necessary to get repaid. That means not only foreclosing on the house (as under current mortgages) but also collecting any remaining unpaid sums after the house was foreclosed on by garnishing the wages, bank accounts, and other assets of the borrower. Think of it as the IRS providing the loan on the same collection terms as it does on taxes, or perhaps using the powers the government now has to collect on student loans.

Other conservatives will have their own alternatives. We should all welcome a healthy party debate over these ideas –but always bearing in mind that it is ideas, not insults, that are most needed today’s emergency.