NEW YORK (Reuters) - Republican presidential candidate John McCain, criticized by his Democratic rivals for being soft on economic issues, lays out a set of proposals on Thursday to address the U.S. housing crisis and ease the burden of unemployment.
McCain, an Arizona senator who has wrapped up his party’s nomination to run for the White House in the November election, will propose a system that allows struggling homeowners to “trade a burdensome mortgage for a manageable loan that reflects the market value of their home,” according to excerpts of the speech seen by Reuters.
“People decide if they need help, they apply for assistance and, if approved, the government under my HOME Program supports them in getting a new mortgage that they can afford,” he says.
The houses involved will have to be people’s primary residence and eligibility will require that they be able to afford new mortgages, he says.
The program would result in homeowners having a 30-year mortgage and an equity stake in their home, while the new lender would receive a federal guarantee of the mortgage.
His comments come a day after President George W. Bush proposed expanding a program to help homeowners meet mortgage payments while Democratic lawmakers pressed ahead with a broader plan, setting the stage for a political showdown over how best to aid the housing market.
Democratic candidates Barack Obama, a senator from Illinois, and Hillary Clinton, a senator from New York, also have laid out housing plans and accused McCain of ignoring the problem.
Bush approved a plan that would insure mortgage loans for homeowners who may have missed payments, were facing the prospect of higher interest rates, and whose homes had decreased in value.
McCain, a Vietnam War veteran who has focused his candidacy largely on his support for the war in Iraq, calls for a task force to look into “potential criminal wrongdoing” in the mortgage lending and securitization industry.
He was scheduled to deliver the speech later on Thursday.
To address rising energy prices, McCain says the United States should stop filling the Strategic Petroleum Reserve to weaken demand for oil and urges Americans to cut back on their energy use.
He also pushes for a program that would use taxes to help people who are unemployed.
“I propose that we build a new system so that as women and men work, their taxes help to build up a buffer account against lost earnings,” he says.
“Then, if they are unfortunate enough to lose a job, they will be able to better meet their obligations.”
McCain says in the speech he will lay out a plan for long-term economic growth next week.
“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.”
Political pressure is building for more dramatic government intervention to prop up a housing market that has pushed the U.S. economy to the brink of recession, if not into one, threatening global growth.
Editing by Mohammad Zargham and Bill Trott