Why Politicians Don't Want to Touch the Housing Crisis

Republicans complain Obama's new measures are a political ploy. But when it comes to housing, there may be no safe political ground.


Barack Obama would have you believe that Mitt Romney is a heartless zillionaire who doesn't think the government should do anything about Americans losing their homes to foreclosure. Romney would have you believe that the foreclosure problem is yet more evidence of Obama's failure to heal the economy.

Meanwhile, when the GOP candidates were asked about housing in last week's debate, they all basically dodged the question. And Obama's plan, announced Monday in Las Vegas, is being criticized as too little, too late, by some Democrats.

The housing issue, it seems, is a political hot potato -- one every candidate can't wait to toss to the next guy before it burns him up.

It's one of those issues that confounds partisan equations and eludes easy messaging, because voters basically want to hear politicians say two contradictory things. They want the government to act to stem the tide of foreclosures. But they don't want their money going to help those they see as irresponsible.

It was housing policy, after all, that spurred CNBC's Rick Santelli to declaim the rant that's credited with catalyzing the tea party movement in 2009. "How many of you people want to pay for your neighbors' mortgage that has an extra bathroom and can't pay their bills?" he railed.

But that sentiment coexists with the notion that something has to be done -- that's why Democrats pounced so gleefully on Romney's statement last week that the government should "let [the foreclosure process] run its course and hit the bottom." On Monday, White House Press Secretary Jay Carney took a shot at Romney's statement, saying, "That's not a solution."

All of this has unfolded against the backdrop of Las Vegas, the nation's foreclosure capital, where half-built subdivisions decorate the sprawling edges of the metropolitan area. The state's governor, Brian Sandoval, and junior senator, Dean Heller, both Republicans, have both said they disagree with Romney's hands-off position.

In the politics of housing, "On the one hand, there is some of that Rick Santelli rage," said Matt Bennett of the center-left think tank Third Way, a former Clinton administration official. "There's real discontent over the idea that people who acted irresponsibly are getting a bailout or a break, while people who are struggling to manage their underwater mortgage while paying their bills aren't.

"On the other hand, there's the idea that the government had better do something, because this crisis is destroying property values, destroying neighborhoods, and greatly dragging down the economy generally."

There's a hard-right position -- that government should stay out and let markets take their course, without trying to mitigate the collateral damage. And there's a hard-left position -- that the government should just bail out homeowners the way it bailed out banks, regardless of whether they "deserve" it. Both are broadly unpalatable.

And so when the Republican candidates were asked about housing last week, Rick Santorum promptly changed the subject: "The problem is, in the first place, is that several people up here ... supported the TARP, supported the bailout," he said, prompting a back-and-forth with Rick Perry over whether that was true.

Romney didn't back down from his statement about letting foreclosures proceed, saying, "The idea of the federal government running around and saying ... we're going to keep banks from foreclosing if you can't make your payments, these kind of actions on the part of government haven't worked." Herman Cain seconded that notion.

Michele Bachmann talked about the emotional attachment of "moms" to their "nests." "President Obama has failed you on this issue of housing and foreclosures," she said. "I will not fail you on this issue. ... Hold on, moms out there. It's not too late."

Like Bachmann, Romney has slammed Obama for not fixing the housing mess even as he's shied away from offering a fix of his own.

"President Obama's Broken Promises on Housing Have Devastated Nevada," blared the headline of a Romney press release pegged to Obama's visit Monday. His campaign also issued a dramatic video, "Welcome to Nevada, President Obama," featuring local residents detailing their economic woes. "We need real leadership in Washington so that we can get out of the hole that we're in," one man says.

Obama administration officials acknowledge that their efforts to deal with the housing problem have fallen short. In part, experts say, it's because they've been narrowly tailored to avoid the Santelli rap -- straining to avoid the perception that taxpayer dollars are being squandered or that your irresponsible neighbor is getting a bailout.

Monday's package of executive actions aims to attack the problem more aggressively. For example, the previous housing plan didn't help homeowners that were more than 25 percent underwater; Monday's initiative lifts that cap.

But several House Democrats say the new initiatives don't go far enough. "It's just baby steps," Rep. Dennis Cardoza told The Hill. In a conference call Wednesday, administration officials framed the housing initiatives as part of a broader messaging strategy aimed at pressuring Republicans in Congress to pass the president's jobs bill.

The "We Can't Wait" campaign, Obama adviser Dan Pfeiffer said, is aimed at "highlighting a series of executive actions to show that we're doing everything we can to help middle-class families."

Republicans complain that it's nothing more than a political ploy. But when it comes to housing, there may be no safe political ground.

Image credit: REUTERS/Jason Reed