TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/74422
COVER STORY At What Cost? A Political infighting puts housing at risk as the approaching elections take precedence over economic stability. By Adam Weinstein prices in many parts of the country, and even a drop in prices at the gas pump. Then came May's jobs report: Unemployment had inched up nationally, to 8.2 percent on the month. The news pushed stocks and spirits down. What would our elected leaders do? s this spring drew to a close, the economy seemed to have a lot going for it: good growth, fewer foreclosures, and higher housing course. President Obama blamed the Republican House for not passing his package of job stimulus and tax credits. "Right now, Congress should pass a bill to prevent more layoffs," he said. "Now's not the time to play politics. Now's not the time to sit on your hands." House Speaker John Boehner They'd shift the blame, of (R-Ohio) blamed Senate Democrats for killing his chamber's job legislation. "The American people are still asking, 'Where are the jobs?'" he said in a statement. "Republicans are listening. It's time for President Obama and Senate Democrats to stop playing games and start listening too." The Senate's majority leader, if Republicans were willing to pursue bipartisan cooperation— "something that, sadly, has been in short supply." Such is the state of American (The book is titled It's Even Worse Than It Looks.) With a landmark election coming this November—where the balance of power in the House, Senate, and White House are at stake—it's only going to get worse. What will it take for politicians to put infighting aside in favor of forward movement for housing and economic recov- ery? What proposals appear to be realistic in these most adverse of political conditions? The truth is, there's not Harry Reid (D-Nevada), in turn pointed a finger back at the House. "We could take steps to spur further growth in the hous- ing market," Reid said, but only 22 | THE M REPORT politics, four years removed from "Yes We Can," and nowhere have the effects been more palpable than in the housing and mortgage landscape. Partisan politics in Washington have stalled scores of housing initiatives, and policy objectives have taken a backseat to political ambitions. "In the third and now fourth years of the Obama presidency, divided government has produced something closer to complete gridlock than we have ever seen in Washington, with partisan divides even leading last year to America's first credit downgrade," write two moderate political scientists, Thomas Mann and Norman Ornstein, in their new book on America's dysfunctional political system. much hope for a rapprochement between these sides. In fact, the legislative gridlock is so bad that the only movement on housing policy currently emanates from the executive branch—which very well may see a 180-degree flip in ideology after the election this November. What's the up- shot of all that noise and tumult? Don't expect much long-term change in the regulatory status quo anytime soon. Agreeing to Disagree: Roots of the Problem F cal divisiveness has gotten since the debt-ceiling debate on Capitol Hill last winter. Even when both sides agree on a change, they go about it in ways that doom any effort to fail—just so they can pin irst, it's important to point out just how bad the politi- a loss on the other side. For just one example, Washington was still trying to sort out a student loan mess when this article went to press: As total student debt in the country surpassed the trillion-dollar mark, interest rates on federal school loans were set to double, to 6.8 percent, on July 1—unless Congress acted to stop the hike. House Republicans passed a bill in April that would have kept student borrowing rates low—but only if the cost were offset by stripping out $5.9 billion in preventive medicine from the Obama health care reform law. Senate Democrats, meanwhile, proposed a similar loan proposal that would be funded by tax hikes on wealthy investors. Nei- ther proposal had a chance—and consequently, neither do student borrowers. When he took control of the House in 2010, Boehner was asked about compromise. "I reject the word," he said. He's been true to his word. The country is more polarized than it has been since—well, maybe since the Civil War, and many analysts have planted the blame for this state of affairs chiefly with Republicans, who have gotten rabidly more conservative than they used to be. "While the Democrats may have moved from their 40-yard line to their 25, the Republicans have gone from their 40 to somewhere be- hind their goal post," Mann and Ornstein write.