Mr. Fix-It doesn't have a credible plan to fix the economy's biggest problem
What's black and white and red all over? I have no idea. But here's what I do know. Mitt Romney's housing plan is an even worse joke.
It's hard to imagine a bigger vulnerability for Obama than housing. The administration's policy has been too little, too late for too long. To borrow a phrase from Ben Bernanke, it's been a case of self-induced paralysis due to a pair of fears. For one, they were worried about forcing banks to recognize even more losses on mortgages back when the financial system's solvency was far from a sure thing. For another, they were worried about a Rick Santelli-led populist backlash against bailing out "loser" homeowners.
So they went small. Refinancings have barely been a rumor, even after Treasury expanded the program. That's still more than can be said for writedowns. Federal Housing Finance Agency (FHFA) chief Ed DeMarco has blocked those -- and Obama has inexplicably refused to recess appoint his replacement. The result has been a tragedy, both for families and for taxpayers. As the New York Fed pointed out, we would save $134 million for every $1 billion of refinancings thanks to lower default rates. It turns out keeping people in their homes is good for everybody.
In other words, Romney had a big opening to go big on housing. Maybe he would come out for a massive refinancing program, like his top adviser Glenn Hubbard wants. Or maybe he would come out for privatizing the government-sponsored entities (GSEs) Fannie Mae and Freddie Mac.Something. Well, the Romney housing plan certainly is something -- something "laughably vacuous" that is, as Matt Yglesias of Slate justifiably lampoons it.
The Romney housing plan comes in two parts: embarrassing, and more embarrassing. Consider this section about fixing the financial system and the GSEs -- and all, as Brad DeLong points out, in 85 words or less!
End "Too-Big-To-Fail" And Reform Fannie Mae And Freddie Mac. The Romney-Ryan plan will completely end "too-big-to-fail" by reforming the GSEs. The four years since taxpayers took over Fannie Mae and Freddie Mac, spending $140 billion in the process, is too long to wait for reform. Rather than just talk about reform, a Romney-Ryan Administration will protect taxpayers from additional risk in the future by reforming Fannie Mae and Freddie Mac and provide a long-term, sustainable solution for the future of housing finance reform in our country.
There are so many problems crammed into so few words. For starters, too-big-to-fail is not about the GSEs; too-big-too-fail is about Wall Street. In other words, it's about the heads-we-win; tails-taxpayers-lose calculus behind big bank bets. Taking the GSEs off government life support does nothing to fix this. Then, of course, there's the question of what reforming the GSEs means. Romney says he won't "just talk" about it -- which makes sense, since he doesn't talk about it here either. It's anybody's guess what Romney wants to do with Fannie Mae and Freddie Mac.
But there are ways to actually end too-big-to-fail. One way is to tackle the "too big" half of the phrase; the other is to take on the "fail" part. In other words, you can either break up big banks until they are small enough to fail, or create a system where big banks can safely fail. Dodd-Frank tries the latter. Its logic is that even a relatively small bank like Lehman Brothers -- or a hedge fund like Long-Term Capital Management -- can topple the financial system if its counterparties are big and numerous enough. Too-connected-to-fail can be just as much a problem as too-big-to-fail. Now, there's still a political economy argument for breaking up the big banks -- so they aren't quite as powerful -- but it seems clear that we need some sort of resolution authority. Except to Romney. Perhaps. He thinks Dodd-Frank is too complicated -- maybe it is! -- and he thinks its Byzantine structure is holding back the recovery. He wants to repeal and replace it with ... something.
Sensible, Not Overly Complex, Financial Regulation That Gets Credit Flowing Again. By replacing the Dodd-Frank Act with sensible regulation (instead of the 9,000+ pages, and counting, of new rules for financial institutions), a Romney-Ryan Administration will usher in a new era of responsible lending. Sensible regulation will allow banks to approve loans for families with good credit rather than rejecting their mortgage applications. A return to more normal lending standards would produce an estimated 640,000 more home sales and 320,000 jobs next year.
Did you catch that Romney wants to do something sensible? What does that mean? Who knows! Something sensible, probably. What about Romney's claim that nixing Dodd-Frank would add 320,000 jobs in 2013 -- is that a sensible? Not so much. Would you believe it if I told you that number comes from the National Association of Realtors (NAR)? Yup, these guys.
That was from Feburary 2008, two years after housing prices peaked. That uncomfortable reality wasn't lost on NAR when they cut this ad two months later, telling people not to worry about falling prices -- increased affordability! -- because housing tends to double every decade.
I could go on. The point isn't that a self-interested group was epically wrong about a once-in-a-generation housing bust. That's true of plenty of others. The point is that Romney is relying on a self-interested group that has been epically wrong to make the case for his -- albeit, nonexistent -- housing plan. It'd be like listening to this guy about, well, anything.
It didn't have to be this way. Conservative wonks have serious ideas about what to do with housing. Mitt Romney even employs some of them as his top advisers. This ambiguity is even more baffling when you consider our jobs slump is the result of our investment slump, which is itself the result of our residential investment slump. Fix housing and you might fix the economy. Now, housing might already be fixing itself, but helping it out would be great policy -- but equally terrible politics.
Obama isn't the only one afraid of anti-bailout rage. Romney is too. Maybe even more so. After all, Romney is counting on the Santellis of the world to back him. And that's why Mr. Fix-It is running on a housing plan short of an actual plan -- a plan that actually fixes things wouldn't pass the Tea Party's ideological sniff test. It would mean helping out homeowners who might not "deserve" help. As Paul Krugman pointed out, Romney is boxed in. He feels like he has to kowtow to the base, but the base does not want to kowtow to the reality of what it will take to get the economy moving again.
Romney is running as an economic expert, but his economic plans either do not add up or do not exist. That leaves him with little more than magical thinking. The joke's on us.
About 10 years ago, after I’d graduated college but when I was still waitressing full-time, I attended an empowerment seminar. It was the kind of nebulous weekend-long event sold as helping people discover their dreams and unburden themselves from past trauma through honesty exercises and the encouragement to “be present.” But there was one moment I’ve never forgotten. The group leader, a man in his 40s, asked anyone in the room of 200 or so people who’d been sexually or physically abused to raise their hands. Six or seven hands tentatively went up. The leader instructed us to close our eyes, and asked the question again. Then he told us to open our eyes. Almost every hand in the room was raised.
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More comfortable online than out partying, post-Millennials are safer, physically, than adolescents have ever been. But they’re on the brink of a mental-health crisis.
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Four decades ago Jimmy Carter was sworn in as the 39th president of the U.S., the original Star Wars movie was released in theaters, and much more.
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Four floors above a dull cinder-block lobby in a nondescript building at the Ohio State University, the doors of a slow-moving elevator open on an unexpectedly futuristic 10,000-square-foot laboratory bristling with technology. It’s a reveal reminiscent of a James Bond movie. In fact, the researchers who run this year-old, $750,000 lab at OSU’s Spine Research Institute resort often to Hollywood comparisons.
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The president managed to cause a brief firestorm by falsely accusing predecessors of neglecting slain soldiers, but real answers about why four men were killed are still elusive.
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How a seemingly innocuous phrase became a metonym for the skewed sexual politics of show business
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The casting couch—where, as the story goes, aspiring actresses had to trade sexual favors in order to win roles—has been a familiar image in Hollywood since the advent of the studio system in the 1920s and ’30s. Over time, the phrase has become emblematic of the way that sexual aggression has been normalized in an industry dominated by powerful men.
By turning the People’s Party into a vocal anti-immigrant force, Sebastian Kurz remade it in his own image.
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A snake-robot designer, a balloon scientist, a liquid-crystals technologist, an extradimensional physicist, a psychology geek, an electronic-materials wrangler, and a journalist walk into a room. The journalist turns to the assembled crowd and asks: Should we build houses on the ocean?