OPINION: Blame crisis on the Democrats

Earth to John McCain: It's the economy, stupid.

The country is in massive financial trouble, and in tonight's debate you should pin the blame squarely on Barack Obama and other liberal Democrats who have long treated mortgage lending as a vehicle for social change, known as "affordable housing." If you can't argue this with passion and conviction, Obama will deserve to win.

As a dutiful vice presidential candidate, Sarah Palin went on the attack Monday. She ridiculed Obama's friendship with unrepentant terrorist William Ayers and his long association with goofball preacher Jeremiah Wright. Monday, Republicans were conflicted as to whether McCain should use the debate to assail Obama's character, judgment and associations.

McCain should do this only if he wants to destroy whatever semblance of a shot at victory he has left, which isn't much. The Ayers thing has never stuck and it never will. Most mainstream journalists want Obama elected, and they will continue to mostly ignore Obama's connections with Ayers. Obama already threw Rev. Wright under the bus, and the conflict ran its course in the primary. McCain and Palin will only undermine their struggling campaign with pathetic exploits of old, failed controversies. It defies comprehension that they have a moment's time to mention these nickel-and-dime scandals at a time of economic crisis.

The outrage that's burdening the public today is the collapse of our housing market, our major banking institutions and insurance companies, and the volatile stock market.

Amazingly, McCain and Palin have allowed Democrats and the media to gleefully exploit public perception that Republicans are mostly to blame for this mess, simply because a failed Republican occupies the White House. Never mind that it's an economic failure with New Deal roots back to 1938.

If McCain is smart, he'll pin Obama in the corner tonight by relentlessly blaming him for championing so-called affordable housing - the single cause that best defines Obama's short political career. If McCain's really brave, he'll even play the race card. Yes, the race card. He'll point out that affordable housing Democrats have made race an issue in lending, pushing colorblind considerations - such as credit histories and income - to the back of the bus.

It was statist Democratic social policy that gave us Fannie Mae and Freddie Mac in the first place. President Franklin D. Roosevelt created Fannie as a way to fund mortgages insured by the Federal Home Administration, and Congress created Freddie in 1970 to further entrench government in the market. Roosevelt thought every American should own a house, and it has been a popular political theme ever since. Home ownership is a great goal, but one that should involve great achievement. Unfortunately, affordable housing advocates conveniently dropped the achievement part long ago.

The fact is, not everyone can or should own a home. Some people simply aren't capable of managing a mortgage and a physical property. Some people, by the grace God, have landlords to manage the details. Owning one's own home is not an entitlement for just anyone with a pulse. A home is a reward for hard work, honesty and stewardship. A home is the result of productivity, which is the only source of our country's wealth. If every adult on American turf is entitled to own a home, and that entitlement is upheld and ultimately paid for by government, then what is a home worth? Not much, as we're seeing. And if home ownership is a birthright, then what's to motivate the average American to work hard and save? Again, not much. And if Americans aren't working hard and saving, what's to become of our economy. Once again: not much.

Freddie and Fannie were designed to give an artificial safety net that enabled risky behavior in lending, all so that more Americans could own their own homes regardless of personal circumstance. Ever since Freddie and Fannie emerged on the scene, social engineers have done everything imaginable to make government the purveyor of this bizarre ethic that we're all better off if everyone owns a home. In 1977, for example, Congress and President Jimmy Carter gave us the Community Reinvestment Act.

Adopted with sincere motive of equality, the law in essence required lenders to make risky loans for risky properties in blighted neighborhoods. The intention was to make credit more widely available to minorities and the poor and the lower class, but the result was a mandate of bad risk and careless lending. The trend quickly spread through other segments of the economy, resulting in middle class consumers buying fancier homes than they could afford in order to keep up with the Joneses.

Before government decided that bank loans were a way to engineer utopia, a lender was motivated by objective facts. Boring facts, such as: What's the borrower's income?

What's the borrower's credit history? What's the real value of the home, should I have to sell it to recoup the loan? How much money can I make in interest?

That was the lending business in a free market. What government concocted, however, was something far different. Freddie and Fannie became the quasi-governmental vehicles that facilitated anything-goes lending. As such, lending concerns became less about trust and income and more about of race, geography, affordable housing and economic development.

Democrats - including Reps. Barney Frank and Charles Schumer - made "affordable housing" the political buzzword of the 1990s. When McCain complained about the need for more oversight of Freddie and Fannie, Frank complained that it would lead to less affordable housing. In 2005, when McCain and some fellow Republicans pushed for more Freddie and Fannie oversight, Schumer expressed dismay that anyone would recommend radical changes to a housing market that was hot.

During his short stint in the Senate, Obama became the second highest recipient of political contributions from Freddie and Fannie. He was a big believer in the skewed lending system, after all, having worked as a community organizer with the Association of Community Organization for Reform Now. ACORN is known for pressuring lending institutions to make politically correct loans, motivated by race. Loans based on race are racist loans.

After politicians made traditional lending considerations passé, the banker's task became one of finding willing borrowers - any borrowers. Government intervention in lending, designed to facilitate homes for special interest borrowers, was facilitated by easy money channeled through Freddie and Fannie. The agencies cultivated a sense among investors who bought the questionable loans - insurance executives, pension managers and such - that government would back them no matter what. Sure, Freddie and Fannie were private, but they weren't really private. They were government sponsored enterprises.

And the investors were right.

But the housing market may never fully recover. There are simply too many homes for any of them to be worth much. They were built with careless disregard for market realities and consequences. The bailout won't solve this. All it will do is keep some big players afloat at the expense of government, which means all we did was grow our federal bureaucracy by something close to $800 billion. The notion of limited government is laughable, at this point.

Republicans and Democrats alike can take blame for this mess. But Democrats can take more blame. Among them, Obama was a big new player - an affordable housing activist (aka community organizer) and the second largest recipient of Freddie and Fannie contributions. It's Obama, not John McCain, who thought everyone was entitled to a house. It's no wonder he says we're entitled to everything else, including health care. If McCain can't make this point clear, he'll deserve what he gets Nov. 4.