Each morning, Bill Scher and Terrance Heath serve up what progressives need to effect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
MORNING MESSAGE: The Ideologue Who’s Holding Homeowners – And the Economy – Hostage
“The housing crisis wasn’t an act of God or an accident of fate. It was caused by radical conservatism and compliant ‘centrism’ that pushed deregulation – the economic equivalent of demilitarization – and stripped oversight agencies of their power. Deregulation is an impractical fantasy, which is why voters rejected it in 2008. So why are the radical ideologues of this failed philosophy still controlling our fate? Edward De Marco is the Acting Director of the Federal Housing Finance Agency … The FHFA’s mission is to protect American homeowners – and in so doing, help the economy as well. But instead of making it easier for homeowners to get relief, De Marco and his lieutenants are making it harder. … Intentionally or not, he has also misled Congress and the public, withheld vital information, and failed to answer questions from the press or the people’s representatives in a timely fashion.”
Dark Side of the Housing Deal
Is the $25 Billion Foreclosure Settlement a Stealth Bank Bailout? asks Time: “One detail of the deal that has raised questions and concerns is reports that the five major U.S. banks will get credit for principal reduction of mortgages they do not own. While the fine print of the plan has yet to be released, mortgage investors fear they will be forced to write down the value of their holdings. … If investors are forced to contribute to this principal reduction plan, the foreclosure settlement could represent yet another bailout – a transfer of wealth from the public at large to the big banks.”
Mortgage investor PIMCO—Pacific Investment Management Co.—is howling against the deal. PIMCO’s Scott Simon: “Think about this, you tell your kid, ‘You did something bad, I’m going to fine you $10, but if you can steal $22 from your mom, you can pay me with that.’”
California Attorney General Kamala Harris feels vindicated for hanging tough in settlement talks. The New York Times: “In the end, she walked away with far more than California was slated to receive in the early days of the talks and a little more than was on the table as recently as January. Beaming into the cameras last Thursday, she said California homeowners were guaranteed $12 billion in debt reduction, while most other states received only promises.”
Promising news: “The Consumer Financial Protection Bureau will revamp the billing statements sent to homeowners and the disclosures required for some complicated mortgages. It also is drafting new rules to prevent servicers from improperly charging consumers for homeowner’s insurance,” The Washington Post reports. “[A] draft of the homeowners’ new mortgage billing statement … includes not only the principal loan amount and interest rate, but also the date the rate could reset and a description of any late payment or penalty fees. One section addresses consumers “experiencing financial difficulty” and includes information on housing counselors. The statements include a phone number and e-mail address to contact the servicer.”
Dean Baker thinks the first-time homeowner tax credit inserted into the 2009 economic stimulus was a mistake. What a credit like this can do is to cause people to move an intended home purchase forward. … The result is that the demand for homes would be expected to plummet after the expiration of the tax credit. This is exactly what happened. … And with the collapse of the demand side of the market, house prices resumed their decline. … his means that in effect the government persuaded many people with a $8,000 tax credit to buy a home on which they may have lost $40,000-$50,000 in less than two years. This is incredibly foolish policy.
GOP Changes Tactics On Payroll Tax
House GOP Leadership Offers 10-Month Extension Without Offsets, writes The Huffington Post. “The House leaders said in the statement that the plan was not their “first choice.” … A Democratic aide familiar with the talks said that Republican leadership had privately conceded the issue in negotiations on Friday, though word had not leaked out over the weekend. “Whether the payroll tax cut moves separately or as part of the larger package, the Republicans have already said they will give up trying to pay for it by slashing medicare or with other harmful cuts,” said the aide. … A senior Republican aide emphasized that the plan stems from frustration on the GOP side, and that it isn’t yet a done deal.”
Bloomberg Businessweek casts this as “a move that may shift blame to Democrats if they balk and Americans’ take-home pay shrinks next month.” “Democratic Representative Chris Van Hollen objected that separating the payroll tax cut from the other two issues [long-term federal unemployment benefits and a measure to prevent a 27 percent cut in Medicare reimbursements to doctors] “would leave millions of Americans who are out of work through no fault of their own hanging” and would leave Medicare patients “in the lurch.” … A Democratic aide with knowledge of the talks, speaking on condition of anonymity, said Democrats are continuing to press for a plan that would include all three elements in closed-door talks between Democratic Senator Max Baucus of Montana and Republican Representative Dave Camp of Michigan.”
Matthew Yglesias in Slate: “If Democrats have the good sense to take yes for an answer, then this’ll be another sign that Recovery Winter is on track.”
Assessing the Obama Budget
The New York Times endorses the Obama 2013 budget proposal: “The president’s budget calls for long-term deficit reduction, but its immediate priority is to encourage the fledgling economic recovery. Instead of trying to stabilize the budget on the backs of the poor, it would raise taxes on the wealthy and on big banks and eliminate many corporate tax loopholes. … If Congress were not dysfunctional — if it cared more about economic stabilization than scoring political points — it would sign on to a budget like this.”
Stan Collender praises the Obama budget as politically smart in Roll Call op-ed. One reason why: “[P]olls now show that the deficit isn’t close to the top issue in the country. In some polls, it’s even close to the bottom of the top 10 and barely in double digits. Therefore, making deficit reduction the top priority in the budget would not be the most astute political move for the White House, and allowing the GOP to claim it as its primary issue will make that party seem out of touch to the majority of Americans.”
Proposed federal spending cuts would hurt the Washington area economy. Washington Post: The rate of local economic growth could decline between 2 percent and 2.7 percent this year, experts said. Growth in the private sector could pick up the slack, but it may not be enough to fully offset federal budget cuts, according to a recent forecast from economist Stephen Fuller, who heads the Center for Regional Analysis at George Mason University.
Austerity watch: Think Progress’ Jeff Spross writes that “The Real World Debunks The GOP’s ‘Austerity Now’ Ideology.” “The Republicans’ reaction [to the 2013 budget] has been swift and united in its thematics, claiming the budget fails to promote fiscal responsibility or future prosperity, accusing Obama of “duck[ing] the responsibility to tackle this country’s fiscal problems” and choosing to “campaign instead of govern,” and generally slamming the budget as a “threat to job growth” and “more of the same failed ‘stimulus’-style policies.” All of this suggests the Republicans are unaware that America is not, in fact, the only market-based western democracy attempting to work its way out of a massive economic slump — or that these efforts provide concrete lessons in what will and will not produce economic growth. … In Britain, a large package of budget cuts and austerity measures which rolled out in 2010 has not unleashed the proverbial job creators in the private market. … In the Eurozone as a whole, the European Central Bank and other relevant authorities have so far insisted on massive austerity measures from struggling countries in exchange for fiscal aid. Here, too, the result has not been a revitalized economy but a continuance of dismal growth rates.”
Speaking of Eurozone austerity: Michael Schuman in Time on the latest Greek debt deal: “…Greece is stuck in a debt trap. The more Greece cuts fiscal spending and hikes taxes, the more growth gets hit, and the harder it becomes to meet deficit and debt targets. Greece’s GDP likely shrunk by some 6% in 2011 – and a recovery is nowhere in sight. That’s why Greece’s debt relative to GDP continues to rise, even after two years of austerity. My guess is that we’ll be revisiting the Greek debt crisis again in a few months, once it becomes apparent that this latest bailout isn’t fixing the country’s problems any better than the first one did.”
GOP’s Transportation Bill: America In Reverse
The contrasting visions, from AP’s Joan Lowy: “This week the House and Senate are set to take up vastly different bills providing a blueprint for shoring up the nation’s aging transportation system. … President Barack Obama chimed in Monday with his own plan to spend nearly half a trillion dollars over six years on transportation infrastructure. But the president’s plan is so much grander than anything Congress is likely to go along with that the administration has swung its weight behind the Senate bill, a bipartisan plan that more modestly proposes to spend $109 billion over less than two years. House Republicans have proposed spending about $260 billion over nearly five years, but the bill is drawing fire from so many quarters that the ability of Speaker John Boehner, R-Ohio, to muscle the measure through to passage is in doubt.”
“Republican transportation bill a package of bad 19th and 20th century ideas,” writes Meteor Blades in DailyKos. “The transportation bill they’ve crafted in the House of Representatives—HR 7, the American Energy and Infrastructure Jobs Act—is a stunning example of this retrograde thinking, a pricey package of brain-numbingly bad ideas. … a 9 percent cut from the last transportation spending package, which expired in 2009 … 25 percent cut in subsidies for Amtrak … End dedicated funding of mass transit … Bar funding for California’s proposed high-speed rail system … Cover the growing annual shortfall in gasoline tax revenue with revenue derived from royalties on wide-open drilling on additional public lands.”
Both House and Senate Republicans using transportation bill to force approval of Keystone XL pipeline. The Hill: “The House version of the massive transportation package, slated for a vote this week, includes provisions to force a permit for TransCanada Corp.’s proposed Alberta-to-Texas pipeline. Several Senate lawmakers backing the controversial oil pipeline filed an amendment Monday authorizing construction of the project, a more aggressive stance than earlier legislation that simply mandated a federal decision deadline. The moves underscore the GOP’s determination to promote the pipeline and attack the Obama administration for rejecting a permit in January.”
OurFuture.org’s Dave Johnson lists the infrastructure proposals in President Obama’s budget.
Paul Volcker on the “Volcker Rule”: “The former Federal Reserve chairman on Monday submitted a long response to critics of the so-called Volcker Rule, the controversial section of the Dodd-Frank financial-reform act that prohibits banks from trading with their own money. The goal of the rule is to help keep the Too Big to Fail set from taking on so many big risks that they blow up the global economy. Again. Monday was the last day for banks, economists, investors and other observers to tell the government what they think about the Volcker Rule.”
Instead of suppressing the right to vote, here’s a voting issue conservatives should focus on. NPR: “A new report by the Pew Center on the States finds that more than 1.8 million dead people are currently registered to vote. And 24 million registrations are either invalid or inaccurate. There’s little evidence this has led to widespread voter fraud, but it has raised concerns that the system is vulnerable. … Washington and seven other states — Oregon, Colorado, Delaware, Maryland, Virginia, Utah and Nevada — are joining a pilot program to share more voter information and other databases, to try to make their lists more accurate.”