A BUZZFLASH NEWS ANALYSIS
by Meg White
The Senate has just this week decided we have a housing crisis, and it’s not because we accidentally left the coffeemaker on. To solve it, they’re retooling the stimulus package. OK, let’s think back to when this whole economic downturn began.
Back in the final months of 2007 I was working on an independent radio project, hoping to get to the bottom of the subprime loan crisis here in Chicago. Talking with city managers, loan officers, people buying auctioned-off properties and those desperately trying to save their homes from foreclosure, the story was sentimental, but not filled with much hope. No one knew exactly how to solve the problem, but everyone agreed that subprime loans should be restructured and that the problem was going to get much, much worse.
And we didn’t even know then that we were already in a recession.
Now that Congress has finally caught up with reality, they’re trying to address the problem in the stimulus package currently under debate in the Senate. After taking a public tongue lashing on how they’re crafting the economic recovery package, both Democrats and Republicans are looking to housing as proof that they are adequately addressing the root causes of this economic crisis.
Something about this rush for relevancy strikes me as similar to what is happening in workplaces around the nation. With demand for productivity falling off, you and your co-workers may be scrambling to look busy in order to avoid the next round of layoffs.
Just be glad you’re not an elected official. They may have jobs that won’t be downsized, but there is no shortage of vitriol targeted at Congress these days.
Still not feeling sorry for them? Well, hear this: They’re going to fix the housing problem in this country! If they can agree on how to do it, that is.
Republicans say tax cuts are key to getting people to buy houses. It’s hard to tell the origination of this idea, however. The GOP plan for the stimulus package has been more tax cuts all along. Fearing looking antiquated, uncompassionate, greedy or all three, they’ve decided to inject some relevance.
Basically, they’ve changed their talking point from “It’s tax cuts that stimulate the economy, not government spending!” to “We want to fix the root of the problem: housing. Democrats just want to spend money on pet projects!” But they’re still selling the same magic solution.
Democrats are almost as politically-driven as the GOP in their recalculation. Hallucinating that the conservative talking points about pork-barrel spending were actually working on the American people, Dems decided to come to the rescue of the ailing housing market, too. Their plan intends to save current homeowners from the brink of foreclosure, something the Obama Administration planned to take on in a seperate action.
This move is even less surprising, but perhaps also less callous than the Republicans’.
It’s less surprising because President George W. Bush’s plans to stem the tide of foreclosures have been deemed abject failures. The terms aren’t that great and enrollment rules are so restrictive as to exclude almost everyone that might need such assistance.
It’s less callous because it has less to do with partisan desires like the ones driving the tax cut cries from Republicans. People actually need assistance with their mortgages, and tax cuts won’t stop foreclosure.
The foreclosure crisis needs to be fixed before the market can bounce back. With all these foreclosed properties available, the market is flooded with more homes than buyers can possibly absorb, tax cut or no.
Furthermore, housing prices are already stunningly low. It’s a bottomed-out sticker price that will convince people to eventually start buying again, combined with job stability and secure social safety nets to help out just in case they do falter. No tax cut, no matter how large, will convince people to buy again without the above preconditions.
A BUZZFLASH NEWS ANALYSIS
Image courtesy Mike Licht.