The McCain campaign thinks that it has an opportunity to turn their candidate's stupendous gaffe -- failing to recall how many houses his family owns -- into a positive by running an advertisement linking Barack Obama to Tony Rezko. Obama, claims the McCain campaign, got help buying his house from Rezko, a Chicagoan who has since gone to jail but received some $14 million in taxpayer money.

The problem with this attack? Aside from being thoroughly misleading -- Obama has not been seriously alleged to have done anything unethical in his interactions with Rezko -- this ad is a serious strategic blunder by the McCain campaign. Why? It blows wide open the door to talk about McCain's all-too-close relationship with Charles Keating and well reported on though somewhat forgotten charter membership in the so-called "Keating Five."

The Keating Five is an old story, so many reporters have shied away from saying much about it because it isn't new -- there aren't a whole lot of new developments in the story. But with McCain talking about allegedly shady relationships, the opportunity is there to go back over McCain's ties to Keating -- whose nefarious activities, which were at least in part aided by his relationship with McCain, ended up costing the American taxpayer $3.4 billion (a whole lot more than the $14 million Rezko was alleged to have received).

Just how close was McCain to Keating? Take a look at this rundown I posted back in January:

Though McCain might try to downplay his involvement, his campaigns received $124,000 from Keating and his associates during the 1980s (AP, 3/2/91), and McCain was described as being personally closer to Keating than any of the other members of the Keating Five (Roll Call, 1/20/92). What's more, McCain accepted more than $15,000 in free trips from Keating, including vacations to Keating's resort in the Bahamas -- trips that McCain failed to disclose at the time (New York Times, 2/28/91; San Francisco Chronicle, 12/3/90).

In the end, the crash of Keating's savings and loan -- which had been shielded by some of his best friends in the United States Senate -- cost billions to the American taxpayer, as mentioned above, and all told the federal government ended up on the hook for close to $125 billion in the fallout of the crisis that befell the underregulated industry in the late 1980s and early 1990s.

Does McCain really want to have to talk about all of this? About the Bahaman vacations he took paid for by Keating? Probably not. But he may soon have to as a result of the shortsightedness of his campaign advisors. Nice move team McCain!

You've got to hand it to Duncan, who called it some time ago. It turns out Barack Obama was incorrect -- John McCain and his family have eight homes, not seven. The Politico has the story:

John McCain's family owns at least eight properties -- not the seven Democrats are alleging or the four McCain's staff identified -- according to a Politico analysis of property and tax records, as well as interviews.

This ought to keep the story brewing for another few hours...

The New York Times Gets It Right A week after the the Washington Post completely botched their assessment of a second stimulus package, the New York Times turns around and nails it.

Their editorial entitled "No End in Site" lays out perfectly what the next few steps should be to help the economy whether this current storm. They begin by stating the obvious:

Lawmakers need to start crafting the next stimulus bill — without repeating the mistakes of the last one. Composed mainly of tax rebates, as the White House wanted, the first stimulus was too broad to deliver a powerful punch.

Amen. It is clear that the first round of stimulus checks didn't work. The editorial then confirms what many experts have been saying is a real potentially relief-filled measure that Congress needs to take with the second stimulus package:

The next package has to focus on actions that are known to yield big economic benefits: bolstered food stamps, which rapidly boost consumption; and aid to states and cities so they can continue to provide essential services.

Lawmakers should also invest in infrastructure projects, like repairing bridges and roads. If not, projects that are already under way may have to be canceled, creating more unemployment.

Thank you. The fact that state and city governments are not asking for money to continue radical spending on pet projects, but instead to protect essential services like education and health care seems to be lost on the minds of those who are not in favor of including state aid in a second stimulus package. Every week there are stories upon storiesof states being forced to slash budgets, pay, and jobs. They are a linch pin of the economy and no one seems to notice. And investing in infrastructure will ensure that we don't add thousands of workers who make their living off of said infrastructure projects. The construction industry has been hit hard enough as is.

The editorial also touches on a response to the home foreclosure crisis:

Congress also needs to ensure that a $4 billion grant to states and cities to buy up vacant properties is quickly and efficiently distributed. The Department of Housing and Urban Development is developing the formula for allocating the money, and early indications suggest it is on top of the process. But the White House is contemptuous of the grant, calling it a gift to speculators when it is actually a lifeline for ailing communities.

If you aren't a Bush republican who just hates any sort of aid not aimed at the highest income bracket, then the main criticism of this effort is that is simply not enough to have an impact on the housing market. Whether or not this is true remains to be seen, but it is still $4 billion to help turn foreclosed properties that the states with said properties currently do not have. In that regard it is a stabilizing factor, even if it is not the stabilizing factor that ultimately turns the foreclosure crisis around. As the editorial says, it is a lifeline for ailing communities who simply do not have the money do to anything with these foreclosed homes.

The time for action is now, but because Congress is in recess the time for action will actually be September. The article suggests the difficulty with creating a second stimulus package in an election year, but brings up the most important point of them all:

Millions of Americans are already suffering. And we fear millions more will be hurt before this crisis ends. They cannot wait until after the election for help.

A very valid point. It's hard to care about battleground polls, attack ads, and town halls when you're losing your job and your home.

More good rapid response. At a townhall in Chester, Virginia earlier today, Barack Obama laid out the narrative that John McCain cemented with his admission yesterday that he doesn't recall how many houses he owns. Jake Tapper covers it HERE. Barack's comments are below:

But the fact of the matter is that John McCain is offering more of the same. He said a while back that he thought that we had made great progress economically during the years that George Bush has been in office. Now, that raised some eyebrows. Great progress economically. Who is he talking to? And it turns out that you get a sense of who he's talking to because some of you saw the Saddleback Forum with Rick Warren. He was asked, well, who do you consider rich? And he thought about it for a second, I don't know. Maybe if you make $5 million. $5 million, then you're rich. Which means, I guess, if you're only making $3 million a year then you're middle class. I guess that's what he meant. His top economic adviser said the other day that Americans should stop complaining; they've become a nation of whiners. That all these economic problems everybody is talking about is just a mental recession. And if you would just change your mind, everything would be okay. Somebody's been laid off, their plant's closed and gone to Mexico or China, change your mind. It's all good. Then, yesterday, he was asked again, what do you think about the economy? He says, Well, I think the economy is fundamentally strong; said the economy is fundamentally strong. Now, this puzzled me. I was confused as to what he meant. But then there was another interview - this is yesterday, same day - where somebody asked John McCain, how many houses do you have?  And he said, I'm not sure. I'll have to check with my staff. True quote. I'm not sure. I'll have to check with my staff. So they asked his staff, and he said, at least four. At least four. Now, think about that. I guess if you think that being rich means you've got to make $5 million and if you don't know how many houses you have, then it's not surprising that you might think the economy was fundamentally strong.  But if you're like me, and you've got one house, or you are like the millions of people who are struggling right now to keep up with their mortgage so they don't lose their home, you might have a different perspective.  And by the way, the answer is John McCain has seven homes. So there's just a fundamental gap of understanding between John McCain's world and what people are going through every single day here in America. And you don't have to be - you don't have to be a Nobel Prize Laureate economist.  You just have to have  a little bit of a sense of what ordinary people are going through to understand that we can't afford eight more years or four more years or one more year of the same failed economic policies that George Bush has put in place.

Watch it:

The McCain campaign's response is pretty funny, the way it clumsily -- but predictably -- wraps Rezko and "bitter gate" all into one.

"Does a guy who made more than $4 million last year, just got back from vacation on a private beach in Hawaii and bought his own million-dollar mansion with the help of a convicted felon really want to get into a debate about houses? Does a guy who worries about the price of arugula and thinks regular people 'cling' to guns and religion in the face of economic hardship really want to have a debate about who's in touch with regular Americans? The reality is that Barack Obama's plans to raise taxes and opposition to producing more energy here at home as gas prices skyrocket show he's completely out of touch with the concerns of average Americans."

Actually, it looks like Barack is perfectly happy to get into a debate about houses, although it should be noted that while the Obama campaign is citing 7 McCain homes, Progressive Accountability counts 10. Great list is HERE.

Update [2008-8-21 14:39:42 by Todd Beeton]:Note that by citing Obama's having made "more than $4 million last year," the McCain campaign puts him firmly within McCain's own standard for the middle class (ie under $5 million.)

This is remarkably fast:

No word yet on where the ad is running, but I'll pass on the details if and when I get them...

Update [2008-8-21 13:3:13 by Jonathan Singer]: I'm informed by the campaign that the ad is running on a "national cable buy."

Just to follow up on Josh's post, this is the type of lede from the Associated Press that can serve as a real problem for a presidential campaign.

Days after he cracked that being rich in the U.S. meant earning at least $5 million a year, Republican presidential candidate John McCain acknowledged that he wasn't sure how many houses he and his wealthy wife actually own.

At a time when the Democrats are taking Chuck Schumer's advice -- that while "John McCain who wears $500 shoes, has six houses, and comes from one of the richest families in his state... It's Barack Obama who climbed up the hard way, and that's why he wants middle-class tax cuts and better schools for our kids" -- and McCain's comments about a $5 million annual salary being the cut off for being labeled "rich" are being ridiculed in strong web ads by the Democratic National Committee (this one goes as far as explicitly labeling McCain as "out of touch" -- and don't be surprised if it's not the last time you see this line of attack before November), McCain could ill afford a gaffe of this magnitude.

This is kind of a game-changing type of mistake. While it relates to the candidate's personal attributes rather than his policy positions, do not think for a second that it does not have the potential to be as damaging to McCain's candidacy as, say, Jerry Ford's statement in 1976 that Poland did not fall under the Iron Curtain was to his candidacy, or John Kerry's statement that he voted for the war funding before he voted against it was to his -- McCain's inability to recall just how many houses he owns gets to the heart of why he is unsuited to be President at this moment of time: He is fundamentally out of touch on the issue of the economy.

The only question at this point, I suppose, is whether Mike Allen recorded this interview on his trusty tape recorder or whether there is video footage of McCain flubbing awkwardly flubbing his answer.

For anyone whose read my pieces in the past, knows that I hold a certain disdain towards former Reagan White House OMB Associate Director/conservative-libertarian Ayn Rand acolyte Larry Kudlow.  It's nothing personal against the guy, it's his ideas and economic policy objectives that I find fault with.  For the past couple of months, he's been going on about this is the "Goldilocks economy."  Essentially, that we're worrying about nothing because one bad economic indicator is being offset by a good one (mind you, he's often just used productivity as that one).  Well today, despite his claims that all is almost well, we got some news that just proves Larry Kudlow wrong!

     It is becoming more apparent with each passing day that the American lifestyle as it currently exist is unsustainable. For more than three decades we have accepted the false narrative that we can live beyond our means and there will be no cost for the extravagance. Not only has our government accepted and promoted this falsehood, but we as a nation have accepted it as well. It has become so engrained into our national psyche that anyone who dares to point out its inherent flaws is immediately ridiculed by politicians, the media, and their fellow citizens. You see rather than looking at the real culprits of our failed domestic and foreign policies we want to create these "bogeymen" who want to destroy our sacred way of life. The truth is that it is always easier to blame others for our shortsightedness and faults.