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.
The House intelligence committee chair, a Trump ally, muddied waters and gave comfort to the White House, but he provided no evidence of wrongdoing or support for Trump’s “wiretap” claims.
Updated on March 22 at 5:24 p.m.
In a head-spinning development on Capitol Hill on Wednesday, Representative Devin Nunes, the chair of the House Permanent Select Committee on Intelligence, revealed that … well, what Nunes revealed isn’t totally clear.
Nunes held a brief press conference Wednesday afternoon that “on numerous occasions the Intelligence Community incidentally collected information about U.S. citizens involved in the Trump transition.” But Nunes’s vague statements raised a host of questions, and his decision to announce them publicly and then go to the White House to brief President Trump, having not informed Democrats on the committee about his new findings, cast a pall of politics over the proceedings.
New research on the creatures’ family tree could “shake dinosaur paleontology to its core.”
When I first read Matthew Baron’s new dinosaur study, I actually gasped.
For most of my life, I’ve believed that the dinosaurs fell into two major groups: the lizard-hipped saurischians, which included the meat-eating theropods like Tyrannosaurus and long-necked sauropodomorphs like BrontosaurusYes, Brontosaurus. It’s a thing again. ; and the bird-hipped ornithischians, which included horned species like Triceratops and armored ones like Stegosaurus. That’s how dinosaurs have been divided since 1887. It’s what I learned as a kid. It’s what all the textbooks and museums have always said. And according to Baron, a Ph.D. student at the University of Cambridge, it’s wrong.
By thoroughly comparing 74 early dinosaurs and their relatives, Baron has radically redrawn the two major branches of the dinosaur family tree. Defying 130 years of accepted dogma, he splits the saurischians apart, leaving the sauropods in one branch, and placing the theropods with the ornthischians on the other. Put it this way: This is like someone telling you that neither cats nor dogs are what you thought they were, and some of the animals you call “cats” are actually dogs.
New books point to gathering trouble in both Asia and Europe.
As the United States under President Trump recedes from world leadership, things are not looking so good elsewhere on earth. Two new books—with similarly morbid titles—have arrived to warn of big trouble ahead for both the European Union and the emerging economies of Asia.
The End of the Asian Century by Michael Auslin offers a point-by-point debunking of the “Asiaphoria” that gripped so many imaginations a decade ago. James Kirchick’s The End of Europe tours a continent in which democratic and liberal forces are losing ground to Russia-infatuated extremists of right and left. The conclusion left behind by a reading of the two together: The post-American world predicted by Fareed Zakaria a decade ago is shaping up as an exceedingly unstable and uncomfortable place.
Warnings that the president’s cavalier disregard for truth would have real-world consequences were vindicated on Tuesday.
Donald Trump’s first two months in office have obviously been rocky. But the disruptions have mainly been internally generated—Trump’s tweets, the tensions and shakeups in his staff, his battles with the press, the investigations—rather than responses to genuine external emergencies. By historic standards, not much has really “happened” in the outside world since January 20.
Sooner or later, something will happen, and Trump and his administration will have to respond.
In mid-April of his first year in office, the new president John Kennedy had to deal with Bay of Pigs fiasco that he had authorized. In early April of his first year, the new president George W. Bush had to manage the repercussions of Chinese and U.S. military planes colliding midair off Chinese territory, and the U.S. plane being forced to a landing at a Chinese base. (Not to mention what happened in September of his first year.)
Many experts have blamed a poor job market, but new research indicates that an overlooked cause may be poor health.
CHARLOTTE, North Carolina—John LaRue is having a tough time of it these days. He used to move things for people, advertising his services on Craigslist. But work slowed up, and he became homeless and started sleeping in his truck, until, that is, someone stole it.
Now, he told me, he’s fighting alcoholism and his health is deteriorating from living on the streets. I met LaRue at a Social Security office outside of Charlotte, where he was hiding his belongings in the bushes because he didn’t have anywhere to keep them and wasn’t allowed to bring them inside. “I feel like there’s a cloud over my head,” he told me. “It’s just been one thing after another.”
LaRue is one among many. In 1957, 97 percent of men in America ages 25 to 54 were either working or looking for work. Today, only 89 percent are. Italy is the only OECD country with a lower labor-force participation rate for men in their prime years. Just why there are so many men who aren’t working is a matter of debate. In a 2016 report, President Obama’s Council of Economic Advisers examined the declining labor-force participation rate and suggested that a drop-off in good jobs for low-skilled men was part of the explanation. Wages, the report theorized, are so low for many jobs that don’t require a college education that men don’t find it worth it to seek out bad jobs. A lack of job training and job-search assistance—when compared to other OECD countries—makes it more difficult for men to move into more lucrative fields. And a surge in incarceration has made it more difficult for men to find work when they leave prison, according to the report.
Even if the ride-sharing service goes under, it won't necessarily set off a bubble-popping chain reaction.
The thing about a market bubble is that you don’t really know how big it is until it pops. So it doesn’t pop, and doesn’t pop, and doesn’t pop, until one day it finally pops. And by then it’s too late.
The dot-com collapse two decades ago erased $5 trillion in investments. Ever since, people in Silicon Valley have tried to guess exactly when the next tech bubble will burst, and whether the latest wave of investment in tech startups will lead to an economic crash. “A lot of people who are smarter than me have come to the conclusion that we’re in a bubble,” said Rita McGrath, a professor of management at Columbia Business School. “What we’re starting to see is the early signals.”
The chairman of the House intelligence committee, which is investigating Russia’s electoral interference, has made public statements so hard to believe that they verge on disqualifying.
Representative Devin Nunes, a Republican, is chairman of the House Intelligence Committee. He is therefore leading a key probe into whether or not Donald Trump’s presidential campaign had ties to Russian meddling in the 2016 election.
Can an inquiry he leads be trusted?
The skeptics include Evan McMullin, the former CIA operative who launched an independent bid for the presidency last year, billing himself as a conservative alternative to the Republican nominee. He says the House GOP “can't be trusted to investigate Russia & Trump's Kremlin ties,” adding, “a special select committee is needed.” And that mistrust seemed vindicated Tuesday when Nunes responded to a journalist’s question about the Russia investigation with a highly dubious answer.
The president was cheered at a Kentucky rally for a politically correct attack on Colin Kaepernick.
During the 2016 election, dozens of voters told me they would vote for Donald Trump partly because they were sick of “social justice warriors” and political correctness. “There is no saying ‘Hey, I disagree with you,’ it's just instant shunning,” a 22-year-old told me in a long exchange on the subject. “Say things online, and they'll try to find out who you are and potentially even get you fired for it.”
Nothing was less popular among this cohort than those who targeted someone’s job, or took glee in their denying them the ability to earn a living, over their speech or political views.
And yet, as best I can tell, they are silent this week. There is no appreciable backlash among President Trump’s supporters to a Kentucky rally where he gleefully bragged about his role in publicly shaming a man for his political views, and the ongoing inability of that man to find a job because of his call-out.
Tech companies are spending hundreds of millions of dollars to improve conditions for female employees. Here’s why not much has changed—and what might actually work.
One weekday morning in 2007, Bethanye Blount came into work early to interview a job applicant. A veteran software engineer then in her 30s, Blount held a senior position at the company that runs Second Life, the online virtual world. Good-natured and self-confident, she typically wore the kind of outfit—jeans, hoodie, sneakers—that signals coding gravitas. That day, she might even have been wearing what’s known as the “full-in start-up twin set”: a Second Life T-shirt paired with a Second Life hoodie.
In short, everything about her indicated that she was a serious technical person. So she was taken aback when the job applicant barely gave her the time of day. He knew her job title. He knew she would play a key role in deciding whether he got hired. Yet every time Blount asked him a question about his skills or tried to steer the conversation to the scope of the job, he blew her off with a flippant comment. Afterward, Blount spoke to another top woman—a vice president—who said he’d treated her the same way.
With a vote set for Thursday, the House Freedom Caucus was defiant. “If they want to bring it up for a vote, we’ll vote it down,” one lawmaker vowed.
Updated on March 22 at 5:27 p.m. ET
When President Trump summoned Representative Ted Yoho and about a dozen other lawmakers to the White House on Wednesday to hear a direct, presidential pitch for the House Republican health-care bill, the Florida conservative told Trump what he wanted: a “100 percent repeal” of the Affordable Care Act.
Like most of his fellow members of the hardline House Freedom Caucus, Yoho believes the party leadership’s American Health Care Act doesn’t go far enough in dismantling the law former President Barack Obama signed seven years ago this week. The group is now playing a game of high-stakes chicken with the White House and Speaker Paul Ryan, vowing they have the votes to defeat the Trump-endorsed plan and hand the new president an embarrassing loss in his first major legislative push.