Can Obama Do Stimulus by Decree?; Iran on a Roll
Obama Campaign Rolls Out Next Phase of Jobs Pitch
“The only way we can truly attack our economic challenges is with bold, bipartisan action in Congress. The president will continue to pressure Congressional Republicans to put country before party and pass the American Jobs Act, but he believes we cannot wait, so he will act where they won’t.”
For eight weeks, it was “Pass this bill.” Starting today in Las Vegas, the president will shift to “We can’t wait,” as he announces various unilateral actions that he will take in a bid to revive the failing economy.
With bipartisan opposition to much of the president’s September proposals for a $47 billion stimulus package and $2 trillion tax increase on top earners, the president is hoping that he can now show that he has no choice but to act alone.
As he has done on offering amnesty to preferred categories of illegal immigrants and has repeatedly attempted to do on global warming, the president is looking to work around legislative opposition to his plans by using executive action.
Obama is headed out west today for more fundraisers in California. The president saw his fundraising slacken in the third quarter and needs to put up big numbers this quarter to finance the kind of relentless attacks on the eventual nominee that his backers have promised.
But in between campaign events, Obama will visit the Las Vegas suburbs, ground zero for the default crisis and one the areas hardest hit by the ongoing hardships for American home sellers.
Previous Obama interventions have fared poorly. While the administration touted its subsidies for banks that rewrite the mortgages of underwater or delinquent homebuyers, the Obama bounties haven’t been able to overcome lenders’ anxieties.
A gloomy economic outlook and a warren of new credit regulations have left banks unwilling to take chances on bad credit risks, even if there is some free money involved. Obama warned banks that they would be at the wrong end of populist pitchforks if they didn’t start lending more liberally, but the weak economy and new rules have left credit markets gummed up.
Former top Obama economic adviser Larry Summers writes in the Financial Times today that the ongoing slide in home values has reduced the net worth of American consumers by $7 trillion in the past five years. That doesn’t just manifest itself in real cash terms but also creates consumer anxiety. Your monthly bills may not change, but people feel and act differently when their home is worth less.
While the president can’t win congressional approval of direct housing stimulus, like the now-expired $8,000 tax subsidy for homebuyers, or for new rules that would require debtor amnesty under certain conditions, he can increase the amount of exposure the federal government has in high-risk loans.
The administration has been pressuring government-subsidized mortgage backers Fannie Mae and Freddie Mac to try to re-inflate the housing market by assuming more risk for banks on undesirable borrowers. The agency placed in charge of Fannie and Freddie after they exploded under the weight of the bad mortgages they underwrote has resisted calls for big bold steps to have the insolvent entities assume more risk, but has shown some recent willingness to make small adjustments to make it possible for underwater borrowers refinance their loans.
The current limit says that borrowers can only get a government-backed loan up to 125 percent of a home’s value – not useful in places like the Las Vegas suburbs where many homes are worth less than a third of their price at the height of the housing bubble. Increasing the limit would put taxpayers on the hook, but might help ease the suffering in swing states like Nevada and Florida where real estate speculation heightened the suffering of the Panic of 2008.
He will need the help of the overseer for bailed out Fannie and Freddie, but it could help the president spur a slew of refinancing that would not only increase the cash available to undesirable borrowers each month but might help create an artificial bottom in home prices.
Obama will also take unilateral action on student loans in the coming days. With $1 trillion in student loan debt and with Democrats having successfully nationalized educational lending during the early Obama era, the president has broad latitude in setting the terms for repayment or amnesty.
Fiscal hawks worry about the plan, but facing a tough slog in his re-election bid, Obama is likely thinking more about the fact that every dollar that he forgives or postpones in student debt is a dollar that could be spent right now.
And even if some say the moves are reckless, Obama will respond by saying that because Republicans refused to “pass this bill” that “we can’t wait.” There’s no surprises here since the White House and Obama campaign telegraphed these moves far in advance. The idea all along has been to show Republicans unworthy of consideration or compromise and then show the president as the (Power Play apologizes for repeating this most hackneyed phrase in Washington today) “adult in the room.”
Two questions remain, though: Will Obama’s stimulus by decree produce the jolt he wants and, more important, are voters really listening to the president’s message on the economy anymore?
Islamists Ascendant in Middle East
“As an Islamic country, we adopted sharia as the principal law. Any law that violates sharia is null and void legally.”
-- Libyan leader Mustafa Abdul-Jalil, head of the National Transition Council, announcing the end of several secular laws from the Qaddafi era, including restrictions on the number of wives men can take.
The latest video of the capture and execution of Muammar al-Qaddafi by rebel fighters shows that someone in the group of irregulars that captured, beat, taunted and shot the Libyan dictator also may have sodomized him with a rifle.
Others in the revolutionary movement have been accused of slaughtering dozens of Qaddafi loyalists from rival tribes in a hotel in the town of Sirte.
The new government, meanwhile, took its first step toward a Islamist regime by embracing sharia law as the baseline for the nation, rolling back the self-serving secularism of Qaddafi.
Next-door in Tunisia, the scene of the first stirrings of the revolutionary movement that has toppled a series of Western clients and allies in the region, the Islamist party is romping in the first elections. While the Tunisian Islamists promise to have a moderate theocracy, even there where the process was much less chaotic and where the U.S. influence was greatest, the move away from secular pluralism has been unavoidable.
The final showdown may be brewing in Iranian ally Syria, where the ruling Shiite Assad family is seeking to crush a rebellion within the nation’s Sunni majority. The U.S. ambassador has fled the Damascus due to threats and western supporters of the regional rebellion are calling for a Western military intervention in Syria on a greater scale than the one that toppled Qaddafi. President Obama even hinted at such action in his remarks taking credit for the death of Qaddafi.