McCain’s proposal, which he called the “HOME Program,” would let some homeowners replace their mortgage for one that is more in line with the depressed value of their home. McCain unexpectedly moves on housing

After saying last month that he was “prepared to examine new proposals” for addressing the mortgage crisis, John McCain instead came out on Thursday and unveiled a new plan of his own.

With yet another monthly government report showing more job losses — and some economists describing the country as already in recession — McCain’s stepped-up response reflects the political peril of not doing enough to respond to homeowners.


So in a speech at a window contacting business in Brooklyn, N.Y., the presumptive GOP nominee rolled out a plan to aid those who have lost their homes or are in danger of foreclosure.

McCain’s proposal, which he called the HOME Program, would let some homeowners replace their mortgage for one that is more in line with the depressed value of their home. He said the plan, to be guaranteed by the Federal Housing Administration, would be limited to those defaulting on only a primary residence and to those who could afford a new mortgage.

“There is nothing more important than keeping alive the American dream to own your own home,” McCain said in a midday speech at Windows We Are Inc. “And priority number one is to keep well-meaning, deserving homeowners who are facing foreclosure in their homes.”

While McCain was detailing his initiative, his Senate colleagues in Washington were passing a housing package of their own.

But McCain offered criticism of that legislation, suggesting that it didn’t address the central problem.

“Tax breaks for builders, funds to purchase homes in foreclosure, and tax credits that are not targeted to where the need is greatest do not constitute the federal help that is warranted,” McCain said.

The Senate bill, which passed 84-12, contains all three: billions in tax breaks for the home building industry, $4 billion in grants to communities to purchase abandoned foreclosed houses and tax credits to people who buy homes in foreclosure.

None of the three presidential candidates showed up to vote.

But both Hillary Rodham Clinton and Barack Obama noted their Republican rival’s previous hesitation to offer solutions and hammered him for what they described as a plan both overdue and insufficient.

Douglas Holtz-Eakin, a top economic adviser to McCain, said his candidate wasn’t being inconsistent.

“This plan is designed to reward deserving homeowners,” Holtz-Eakin noted. “He’s always said that.”

Plainly, though, McCain and his campaign aides are grappling with finding a middle ground between the interventionist approach favored by Obama and Clinton and the preference of most conservatives not to reward what they view as careless behavior on the part of home buyers who got in over their head.

In a speech late last month on the topic, McCain said he would evaluate new proposals based on the principle that it “is not the duty of government to bail out and reward those who act irresponsibly,” but he offered no concrete solutions.

After facing criticism for not addressing the problem, McCain issued an unusual statement that same week reiterating that he would consider proposals. But he only called on private lending institutions to help homeowners.

As on other issues, McCain is hearing from a wide range of voices on the credit crunch, which may explain his decision to unveil a plan Thursday.

“He’s got to make a decision,” said one experienced Republican economist who requested anonymity to speak candidly. “He’s got a Phil Gramm on one extreme with the view of, ‘Let's not get involved.’ But many of his other advisers would take the interventionist position.”

The pragmatists in McCain’s circle seem to have won out.

“He sounded like the old John McCain, the 'Teddy Roosevelt' John McCain,” observed Georgetown University professor John Haskell of the candidate’s speech Thursday. “That is, that an energetic federal government needs to be there as countervailing force to the market when the market doesn’t perform properly.”

But the issue highlights the balancing act McCain has to walk to avoid a laissez-faire tag in tough times while also not unduly angering his limited-government base.

“We’re going to be smart about it and not just throw money at the problem, but government does have a role,” is how Haskell characterized the third way.

McCain’s proposal Thursday, though, has already raised the antennae of some in the libertarian wing of the GOP coalition.

“I do worry that he has instincts toward government activism,” said David Boaz, executive vice-president of the Cato Institute.

Citing an imaginary young couple making a combined $72,000 who bought a $500,000 home they couldn’t afford, Boaz said that “a lot of people out there who see this are saying, 'What is this nonsense [about intervening]?'”

The truer indicator of McCain’s intentions will come next week, when he is to give a major speech that Holtz-Eakin said would include both a broad vision for an improved economy and specific proposals for how to get there.

In his final sentence Thursday in Brooklyn, though, McCain appeared to signal that his prescription for bolstering the economy would include at least a helping hand from Washington.

“But let me make it clear that in these challenging times, I am committed to using all the resources of this government and great nation to create opportunity and make sure that every deserving American has a good job and can achieve their American dream.”

Victoria McGrane contributed to this story.