Did Obama Scuttle the Recovery?
by MIKE WHITNEY
The New York Times believes that Barack Obama is responsible for today’s sputtering economy. In an article titled “Cautious Moves on Foreclosures Haunting Obama”, Times journalist Binyamin Applebaum says that Obama’s failure to seriously address the housing crisis has left the economy weaker than it should be at this point in the recovery.
According to the Times, Obama rejected the idea of “a broad bailout of homeowners” similar to the multi-trillion dollar lifeline he provided for the Wall Street banks. The president figured that his modest mortgage modification program (HAMP) would suffice until the economy rebounded “taking care of the rest.” Here’s an excerpt from the article which illustrates Obama’s uneven approach to the suffering of homeowners who were facing foreclosure in record numbers:
“During his first two years in office, Mr. Obama and his advisers repeatedly affirmed this carefully calibrated strategy, leaving unspent hundreds of billions of dollars that Congress had allocated to buy mortgage loans, even as millions of people lost their homes and the economic recovery stalled somewhere between crisis and prosperity.”
So the money was available, but the administration refused to use it for its designated purpose. Why? And why did Obama decide that it was okay for homeowners to suffer while the perpetrators of the crisis were lavished with taxpayer-funded bailouts and golden parachutes?
Here’s more from the Times:
“The nation’s painfully slow pace of growth is now the primary threat to Mr. Obama’s bid for a second term, and some economists and political allies say the cautious response to the housing crisis was the administration’s most significant mistake.”
“Mistake”? Was it a mistake because it undermined Obama’s chances for reelection or because the people he was supposed to serve ended up losing their homes or seeing their equity wiped out in the bat of an eye?
More from the Times: “They were not aggressive in taking the steps that could have been taken….And as a consequence they did not interrupt the catastrophic spiral downward in our economy.”
Precisely, which is why it is ridiculous for Obama loyalists to argue that this is still Bush’s economy. It’s not. This is Obama’s economy. The reason unemployment is high, growth is anemic and the economy is on the brink of another slump, has to do with the policies that were implemented by the current administration. That’s where the buck stops.
Obama only wanted to help “responsible borrowers”, a standard that was never applied to the thieving class that runs the Wall Street banks and brokerages. For them, it was carte blanche– unlimited loans, subsidies and bailouts amounting to trillions of dollars. Everyone knows what happened.
Obama also wanted to modify loans, to tweak the interest rate or extend the life of the loan, instead of reducing the principal which would have prevented millions from losing their homes, but would have also dug into the windfall profits of crooked bankers. So, he nixed the idea outright. Is there any doubt whose interests were being served?
As a result, Obama’s mortgage modification program was a spectacular flop that kept less than 1 million people in their homes while nearly 6 million homeowners got the boot. Even so, the administration still hasn’t changed its approach. Policy is largely in the hands of the bankers who communicate their demands through their agents in the White House.
Here’s more from the Times:
“Mr. Obama sponsored cramdown legislation as a senator, endorsed it as a presidential candidate and called on Congress to pass it in the Arizona speech.
But he also repeatedly pressed the pause button. When proponents sought to add a cramdown to the Emergency Economic Stabilization Act in September 2008, Mr. Obama, who had flown back to Washington from the campaign trail, persuaded them to postpone the “partisan” effort as an example to Republicans, who said the measure would violate existing contracts.
In February 2009, after Mr. Obama became president, the White House asked Democrats not to attach the measure to the American Recovery and Reinvestment Act, fearing it would cost votes. In March, a watered-down version finally passed the House, but the mortgage industry rallied opposition to block it in the Senate.”
Can you believe it? Obama repeatedly torpedoed the one measure that the experts agree would have kept more people out of foreclosure and stabilised prices after promising that he would support it! Incredible! This is what it means to be a “creature of the banks”; only the interests of big finance matter. Everything else is dismissed as claptrap.
The Times article points out that even crackpot senator John McCain would have done more to spare delinquent homeowners and mend housing than Obama. McCain wanted to put $300 billion into a Home Owners’ Loan Corporation-type operation that would have bought and refinanced distressed mortgages in the interest of keeping people in their homes and normalizing the market. But, as the Times notes, “Obama, … dismissed the idea as a “risky” giveaway to mortgage companies. “Taxpayers shouldn’t be asked to pick up the tab for the very folks who helped to create this crisis,” he said at a rally two days later in Dayton, Ohio.”
In truth, Obama’s chief economic advisors, Lawrence Summers and Timothy Geithner, opposed ANY additional spending on housing. They simply did not want to help the victims in this massive mortgage-ponzi-fraud at all. In fact, according to the Times, “Mr. Geithner told Mr. Obama that if even if an additional $100 billion were available, he still would not spend it on housing.”
That says it all, doesn’t it? The people who are actually pulling the strings are opposed to helping ordinary working people whether they have the money or not. Isn’t that what you call class warfare?
So now the economy is in the toilet, (and probably headed for recession) mainly because Obama and Co. didn’t have the balls to stand up for what’s right. That’s not to say that the carpetbagging Romney would be a better choice for president. He wouldn’t be. But let’s not delude ourselves about Obama. He is not the man he pretends to be.
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at firstname.lastname@example.org.