Resident Fellow Desmond Lachman

Should John McCain be elected president of the United States in November, domestic economic rather than international security issues will be the main preoccupation of his administration. For like it or not, a McCain presidency will be taken up, at least in its early years, with attempting to heal the U.S. economy from the fall out of  its worst housing bust and its most wrenching credit crisis in the post-war period.

As if having to deal with major housing and credit market busts were not enough, Mr. McCain will also have to devote much of his attention to addressing the underlying causes of America's most serious energy crisis in the past thirty years. With international oil prices now having surpassed all time record levels, even after adjusting for price inflation, one must expect that the energy issue will be high on the political agenda.

A distinguishing hallmark of Mr. McCain's character in his many years as a US Senator has been his very principled, albeit pragmatic, approach to policy issues. Many observers who have closely watched Mr. McCain's long and distinguished political career characterize him as a conservative populist, who acts by instinct rather than by economic ideology. This makes it more difficult to predict how Mr. McCain would act in office than a more ideologically driven president like Ronald Regan or George W. Bush.

In terms of Mr. McCain's overall economic philosophy, one would not wish to describe him as a mainstream conservative. Rather, Mr. McCain's views seem to be more akin to those of his political hero Teddy Roosevelt, who was the United States' president at the beginning of the last century. Like Teddy Roosevelt, Mr. McCain would seem to view the government as the ultimate arbiter in the political economy with a particular role in being a counterweight to the accumulation of wealth and power.

In his 2000 presidential campaign, Mr. McCain frequently inveighed against the power of special interests and touted himself as the person who would get reforms done by counterbalancing their power. These themes have been repeated in his 2008 campaign with the statements that he has been making against excessive compensation of Wall Street banking executives, the undue influence of lobbyists on key sensitive political decisions, and the need to shield consumers from higher gasoline prices. 

It is true that in his many years in the Senate, Mr. McCain has changed his mind on a number of important economic policy issues. Among the more notable of these shifts has been Mr. McCain's position on whether or not to make the Bush tax cuts permanent.  Despite these shifts, he would appear to have a core set of beliefs to which he has consistently adhered in his long political career and which have been spelt out rather boldly in his 2008 electoral platform.

The overall sense that one gets from reading Mr. McCain's electoral platform is of a man who fervently believes in the market as the best way of securing sustained prosperity for the American people. One also gets the sense of someone who is outraged by corporate and government waste and who believes in the need for far-reaching economic reform.

Consistently throughout the campaign, Mr. McCain has emphasized a deep belief that taxes should be kept low while wasteful government spending should be eliminated and America's entitlement programs should be overhauled. He has also courageously expressed an unwavering commitment to free trade and a deep seated belief in the need for a long run energy policy.

While Mr. McCain's economic program constitutes a coherent plan to deal with many of the more important long-run issues affecting the US economy, it is rather silent on the immediate and difficult economic policy issues confronting the country. Indeed, judging by the ongoing US housing market bust, the credit crunch, and skyrocketing international oil prices, it could very well occur that by January 20, 2009, a newly elected President McCain will be confronted with a very difficult economic situation that will require his immediate attention.

During the electoral campaign, Mr. McCain has studiously avoided being drawn into discussing any details as to what he might do to address the housing market and credit market crises were he to be elected president. Instead, he has largely limited himself to reiterating that he is firmly committed to the principle that it not the duty of the government to bail out and reward those who might have behaved irresponsibly, be they large banks or small borrowers. Mr. McCain has also expressed the view that government assistance to the banking system should be based solely on the goal of preventing systemic risk.

In a similar vein, Mr. McCain has been far from specific as to what measures he would propose to wean the United States from its dangerous dependency on foreign oil. Rather Mr. McCain has limited himself to emphasizing how much he feels the consumers' pain at the gas pump and how he thinks that it would be a good idea to offer motorists a holiday from higher gas prices during the summer months by temporarily rolling back gasoline excise taxes.

Much of President George W. Bush's presidency was devoted to dealing with the fall out from the unanticipated foreign policy related events of September 11, 2001. John McCain might find that his first term in office might similarly be devoted to issues that are not of his choosing. For while Mr. McCain has a clear and well articulated long-term strategy to address many of the United States' structural economic problems, he might find that his attention in office is diverted by a deepening in the United States' housing market and credit market crisis and by an ongoing energy crisis.

Desmond Lachman is a resident fellow at AEI.