Neither campaign is addressing the one issue that's both the culprit of the financial crisis and the key to our recovery
For the last six months, Barack Obama and Mitt Romney have battled ferociously to be seen as the true champion of the middle class. Yet neither candidate has offered concrete solutions for -- indeed they have rarely raised -- a central economic issue: the housing crisis.
How can the collapsing home prices that pummeled the middle class hardest -- accounting for three-quarters of the loss of wealth since 2007 -- not be a campaign issue? Why is a principal cause of the economic downturn the focus of so little debate?
One explanation is simple. Across the country, the housing market is picking up. In September, new home construction increased by fifteen percent, its fastest rate in four years. And after seeing home mortgages become economic yokes that prevented their parents from moving out of depressed areas, many young Americans are less interested in buying homes.
For existing homeowners and the government, though, housing remains an enormous issue. If new government initiatives are not implemented, it could take another three to five years for the market to fully recover, analysts estimate. And The Wall Street Journal reports that neither candidate has offered ways to remake failed mortgage giants Fannie Mae and Freddie Mac, which have already cost taxpayers $140 billion and face further losses.
Across the United States, nearly 10.8 million properties -- 22 percent of homes with a mortgage on them -- remain underwater, according to CoreLogic, a data analysis firm. The numbers of properties where owners owe more than their home is worth is shrinking, but analysts say the process can, and must, be sped up.
Both Obama and Romney, though, have been silent on the issue. Why?
"It turns out to be a lose-lose issue for both candidates," John Vogel, a professor at Dartmouth's Tuck School of Business, recently told MarketWatch. "And therefore gets ignored."
For each candidate, the reason for staying mum on housing is different. Obama does not have the strongest record to run on. And Romney has found that wading into housing opens himself up to being painted as a heartless corporate mogul.
In an interview with Reuters TV this week, Nobel Prize winning economist Joseph Stiglitz said it was "shocking" that neither candidate had spoken more about the issue or offered concrete solutions. He and other critics from the left say both men remain beholden to Wall Street.
"In some sense, they don't want to offend the banks," Stiglitz said. "The banks have been a major problem to doing something about the problem."
Liberals have criticized the Obama administration for failing to spend all of the money that was allocated to ease the housing crisis. And the president has steered clear of proposals being considered by San Bernardino County, California, and other communities to seize distressed mortgages by eminent domain and restructure them. Wall Street bond investors overwhelming oppose such an approach.
The programs Obama created in 2009 to end the crisis, meanwhile, are not functioning as well as they should. In an October 10 report, CoreLogic analysts Sam Khater and Molly Boesel said that 1.5 million Americans have participated in Obama's Home Affordable Refinance Plan (HARP) - which helps strapped homeowners refinance.