Thursday, September 08, 2011

So far so good, Obama...

Well, I think Obama accomplished step one of what he needs to do tonight. He took it to the Republicans.  Without accusing them of deliberately blocking action to help the economy, he made it clear that that's what they're doing, since they're blocking consensus measures that they've supported and proposed in the past -- most notably for payroll tax cuts:
I know some of you have sworn oaths to never raise any taxes on anyone for as long as you live.  Now is not the time to carve out an exception and raise middle-class taxes, which is why you should pass this bill right away.      
He made the Republicans stand and cheer for infrastructure investment and payroll tax cuts and tax breaks for hiring the unemployed.  Because he could credibly characterize all the measures as historically bipartisan ones, he was able to cast his injunction to "pass this bill" as a matter of responsibility and patriotism. The refrains were simple: "pass this bill and..."  and "you should pass this jobs plan right away."

He was straightforward, too, about applying political pressure, appealing to listeners to pressure their reps:

You should pass it.  And I intend to take that message to every corner of this country.  I also ask every American who agrees to lift your voice and tell the people who are gathered here tonight that you want action now.  Tell Washington that doing nothing is not an option.  Remind us that if we act as one nation, and one people, we have it within our power to meet this challenge.
So there is the gauntlet. Apparently Obama's pleas in late July to voters to call their reps and ask for compromise as the debt ceiling deadline did generate a lot of calls -- but given that artificial deadline, there was no time for him to reap any benefit.  Now we will see whether a) Obama knows how to follow through, b) whether voters will respond (even in red states, might some push for payroll tax cuts?), c) whether a significant subset of House Republicans are susceptible to any voter pressure that may develop, and d) whether Obama can pull a Truman and run against their obstruction assuming it continues more or less undiluted.

We are told by political scientists that presidential speeches don't move public opinion. But according to a host of polls, people support the individual measures Obama has been pushing -- most broadly, they support action to produce jobs.  So the question is whether a president can mobilize popular opinion for proposals that are already reasonably popular. And that goes for tax increases in any deficit reduction plan too.

Also, Obama promised one crucial form of executive action that's been long a-comin:
And to help responsible homeowners, we’re going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4% -- a step that can put more than $2,000 a year in a family’s pocket, and give a lift to an economy still burdened by the drop in housing prices.  
I have read that the acting director of the independent FHFA, Edward DeMarco, has resisted enabling Fannie and Freddie to engage in large-scale refinancing -- unlike Obama's nominee, Joseph A. Smith, who indicated he was more receptive and was successfully blocked from confirmation by Richard Shelby.  So what gives? If DeMarco is opposed to writing down principal, is he more receptive to refis at lower interest rates, as indicated above?

Update, 9/9: Nick Timraos at the WSJ has the scoop on the refi idea. It would be an expansion of the existing HARP, the Home Assistance Refinance Program, which "allows borrowers with loans worth 80% to 125% of the value of their houses to refinance without putting down more cash or taking out mortgage insurance." Though an estimated 4 million people are eligible, just 838,000 have refinanced under the program to date -- in part because of still-high fees for borrowers, and in part because mortgage underwriters are reluctant to take on so-called "put-back" risk -- a requirement that they repurchase the loans from Fannie and Freddieif they don't strictly follow guidelines. Presumably an opening up of the process would entail smaller costs for borrowers and reduced risk for lenders.  And yes, the administration would have to work with DeMarco to implement any changes. And no, no one is pushing to put teeth in the other mortgage assistance program, HAMP, which was supposed to use TARP money to pay banks to lower mortgage rates.

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