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Former McCain Adviser Admits Bailout Support a Strategic Blunder

     As it turns out, swaying from conservative principles doesn’t always pay off for a Republican presidential candidate. Sen. John McCain learned that lesson that hard way.

 

     Douglas Holtz-Eakin, a senior policy adviser to McCain’s failed campaign, said Nov. 19 that McCain’s support for the $700 billion bailout of the financial sector was the “key strategic policy error of the entire campaign.”

 

     “We also make mistakes,” Holtz-Eakin told a group of conservatives at The Heritage Foundation in Washington, D.C. “There’s no doubt about it--20/20 hindsight. I think the key strategic policy error of the entire campaign, that is mine, is believing that the bailout bill would help.”

 

     Both McCain and President-elect Barack Obama voted for the bill, which has taken on a different role since being promoted as a measure that would have given the Secretary of the Treasury the authority to purchase the troubled assets thought to be behind the current financial crisis.

 

     Holtz-Eakin said it was a move of desperation because the campaign was taking a lot of criticism for not being more proactive at the time.

 

     “Financial markets were falling apart,” Holtz-Eakin said. “We were in a terrible position as a campaign in trying to figure out whether to continue to just take hits--which we were--or to try to do something about it when the bailout bill was stalled. We elected to go do something about it. It didn’t pay off as a campaign largely because getting that bill through was not helpful.”

 

     He advised the audience, which included several economists and policy analysts, to evaluate the strategy if confronted with having to choose between politics or core policy beliefs.

 

     “If anyone is ever in a comparable position before us, take the time--or again in the future, take the time to step back and ask, ‘Is this a good policy move? Will it really help?’” he said.

 

      The bailout legislation, which was promoted by Treasury Secretary Henry Paulson as a do-or-die vote, has been roundly criticized by Republican members of Congress. Holtz-Eakin explained this bill was something McCain normally wouldn’t have supported.

 

     “That was the key strategic error that we really made,” Holtz-Eakin added. “Had we stayed away from Washington, stayed away from being identified with that bill – which was ultimately against the John McCain brand-- that’s not a bill he normally would support-- we would have been better served in the long run, I believe. But, that financial market meltdown combined with bad strategic decisions, I think, was a real crippling combination of events.”

 

     Holtz-Eakin did bring credentials to the McCain campaign, having served as the former director of the Congressional Budget Office and as an economist for Presidents George H.W. Bush and George W. Bush.

 

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