Over the Thanksgiving holiday, the Washington Post published a story discussing how Obama is planning on dealing with the ongoing mortgage dilemma. Of course, the first suggestion to Obama from is cadre of advisors was to (wait for it…wait for it…) forgive the debt:
Nearly all said Obama should introduce a much bigger plan to forgive part of the mortgage debt owed by millions of homeowners who are underwater on their properties.
The ongoing mortgage crisis is nothing new. This has been a perpetual drag on economy since the first day that President Obama took office. It is interesting to note that contained within the story is the acknowledgment that the “recovery” that we have been experiencing has sputtered.
The meeting highlighted what today is the biggest disagreement between some of the world’s top economists and the Obama administration. The economists say the president could have significantly accelerated the slow economic recovery if he had better addressed the overhang of mortgage debt left when housing prices collapsed. Obama’s advisers say that they did all they could on the housing front and that other factors better explain why the recovery has been sluggish.
The question is relevant because although Obama won reelection this month, the vast majority of voters still say the economy is weak and not getting better. Policymakers in Washington are now focused on another type of debt — the public debt all taxpayers owe — but the slow economic recovery, which depresses tax revenue, makes that problem harder to solve.
The odds that President Obama successfully gets a bill through the house waving hundreds of millions of mortgage debt is slim to none. Right now, Congress and the White House are focusing squarely on the fiscal cliff. This is especially true as Speaker of the House John Boehner is focusing almost exclusively on navigating the tax rate issues.