Krugman On Mortgage Plans: Obama "Cautious," Clinton "Bold And Progressive"

New York Times columnist Paul Krugman writes on the presidential candidates' mortgage crisis proposals:

Barack Obama's speech on the economy on Thursday followed the cautious pattern of his earlier statements on economic issues.

I was pleased that Mr. Obama came out strongly for broader financial regulation, which might help avert future crises. But his proposals for aid to the victims of the current crisis, though significant, are less sweeping than Mrs. Clinton's: he wants to nudge private lenders into restructuring mortgages rather than having the government simply step in and get the job done.

Mr. Obama also continues to make permanent tax cuts -- middle-class tax cuts, to be sure -- a centerpiece of his economic plan. It's not clear how he would pay both for these tax cuts and for initiatives like health care reform, so his tax-cut promises raise questions about how determined he really is to pursue a strongly progressive agenda.

All in all, the candidates' positions on the mortgage crisis tell the same tale as their positions on health care: a tale that is seriously at odds with the way they're often portrayed. ...

Mrs. Clinton, we're assured by sources right and left, tortures puppies and eats babies. But her policy proposals continue to be surprisingly bold and progressive.

Finally, Mr. Obama is widely portrayed, not least by himself, as a transformational figure who will usher in a new era. But his actual policy proposals, though liberal, tend to be cautious and relatively orthodox.

Read the full column.

Comments

[KiwisCanFly]

The enlightened leader is heedful and the good general is full of caution. Sun Tzu (Chinese General and author).

Sen. Obama is both!

S. 2280 [109th]: STOP FRAUD Act
Introduced Feb 14 2006
Housing: In the U.S. Senate, Obama introduced the STOP FRAUD Act to increase penalties for mortgage fraud and provide more protections for low-income homebuyers, well before the current subprime crisis began.
This bill never became law. This bill was proposed in a previous session of Congress. Sessions of Congress last two years, and at the end of each session all proposed bills and resolutions that haven't passed are cleared from the books.

http://www.govtrack.us/congress/bill.xpd?tab=main&bill=s109-2280

[JonStewart4President]

I am not going to just out of hand dismiss Krugman, though unfortunately it seems that is what he's doing to Obama and in defense of Hillary.

First off he can't resist putting in some language for victim Hillary. Totally unnecessary. Second he doesn't mention her proposal for a five-year freeze on interest rates for all subprime mortgages, which is just nuts. Nor is it in his column and only two lines about it in a blog, that Hillary wants to have Reich and Greenspan, who helped put us into this mess, put in charge of the economy. Why doesn't he mention any part of that in his criticisms of her potential economic plans?

Also Krugman points out how great it is that Hillary wants to use the same Frank/Dodd legislation that Obama mentions using as well, but she gets praised for it, it's ignored when used by him.

Obama madepoints in stressing regulation, the ill effects of dergulation and was able to draw the line better about main street and Wall street being tied together economically.

Neither Obama's or Hillary's plans were perfect or really got into how they would be paid for.

I actually think that Obama's plan went further than Hillary's plan and seemed very Krugman-ian of him. I think that it's only Krugman's seeming blind antipathy to Obama that is getting in the way. Given his recent vitriolic remarks about Obama and his supporters a few weeks ago, I'm not surprised.

[klondiker]

1. Actually, the five-year freeze on subprime rates and 90-day moratorium on foreclosures will really help to stabilize the market and stop the blood flow of homeowners who are losing their homes every day.

2. As for the the point about Rubin and Greenspan: she never said that they should be "put in charge of the economy". She was simply suggesting that a working group should be formed to determine whether the extension of FHA's authorities to take over mortgages will be effective. So, this working group will be appointed to look into one specific question and then present their findings. In no way, is this tantamount to being "put in charge of the economy", which would actually be quite unconstitutional, considering that that job lies with the current Chairman of the Reserve and the Treasury Secretary. And, Greenspan and Rubin, not having been approved by Senate, can't actually run the economy anymore.

[klondiker]

3. Point taken that Obama spoke about regulation in the financial industry. Fair enough. I will give him credit for that (pun not intended, haha). But, I still felt that it was too wishy-washy, and not enough specific proposals. I would have liked to hear that investment banks would at least have the same regulation as commercial banks, given that they can now borrow money at the same rates as commercial banks.

4. Finally, and most importantly, the crux of Krugman's criticism lies here: Obama has said that lenders should be provided with incentives to buy or refinance mortgages, whereas Clinton is actually recommending that the FHA itself be given the authority to step in and buy or refinance mortgages. As anyone with a basic grasp of public policy will tell you, Clinton's is the more progressive solution here.

[ruscle]

And from what I understand, Obama is sponsoring the Frank/Dodd legislation. Clinton is not.

[plooger]

Not Robert "Reich".... but Robert Rubin.

http://dealbook.blogs.nytimes.com/2008/03/25/clintons-mortgage-solution-bring-in-greenspan

... and, as klondiker points out, not "in charge of the economy", but a task force to address the mortgage crisis. But your point remains, that Greenspan and Rubin have been part of the mindset that led to our current crisis, and so other, less conflicted economists might be a better bet.

[babar77]

Krugman doesn't want government regulation when Wall Street has done nothing but scream that it needs it through their actions. If they so obviously can't figure out their own financial products, who can?

The only reason he likes Clinton's proposals is because they lack the Government regulations stressing ethics, transparency, and sound risk taking. Apparently, allowing the market to form bubbles so large that when they pop they risk spiraling us into depression is considered "progressive."

[klondiker]

God, how can you people not see that when it comes to the mortgage and housing crisis, Hillary has the more progressive plan, and she's had it all along???

I guess it's just easier to spew out pre-programmed hate-Hillary sentiments than actually look at the facts.

[TheInsomniac]

The facts are that her husband's administration helped get us in this mess. Do you really think she's going to suddenly turn away from the neocon economic agenda that helped put and keep Bill in office, and that has funded her own run?

[majseventh]

Insomniac is listening to the Republicans too much or is one.
Hillary is by far better on the economy, health care and foreign affairs. Even John Edwards says she is tough, experienced and better prepared than Obama who is just inspirational and bringing new people to the party.
Wake up!

[ruscle]

When you look a the Clintons' past record (sorry to lump them together, but they themselves do) you see a pattern of things like NAFTA support and deregulation that created the housing market mess. Now she's on the campaign trail and talking differently.

Remember when George Bush was on the campaign trail-- he talked differently than his past record (in TX) would indicate he would govern.

Clinton has been caught in several seious lies lately (SCHIP, NAFTA, Ireland Peace, Bosnia Snipers). She not only voted for the war, but she has supported and voted for a number of regressive things (Like supporting a flag burning amendment, voting against banning cluster bombs, voting for Kyl-Lieberman amendment.)

It come down to: I don't care how brilliant her plan looks. It is just a campaign promise at this point. She's a politician who knows what to say to get elected. Campaign rhetoric does not always equal actual policy.

The other side to this is, if she can get elected over McCain (which is questionable) can she bring enough people together to form a broad consensus to get laws passed and things done? I don't think so. Considering how many people she's alienating now (Judas, Unimportant states, Latte sipping liberals, Extortion letters from supporters) it is doubtful there will be much good will for her to work with - except with large corporate donors. Which brings us back to the old Clinton agenda of deregulation.

[zelduh]

I thought economists were good with numbers. Cuz they need to kinda forecast the future, based on the past and the present. I think that is what good economists are known for anyway.

I thought economists took tough courses like Statistics, trigonometry and stuff. (I kinda remember seeing them in my classes. I paid an econ student to help me with my statistics class.)

Perhaps Krugman should go back to his old Texas Instruments calculator and actually run a probability forecast of Hillary's odds of winning the nomination.

[ChandraSF]

Mr. Krugman, you could have hailed Mrs. Clinton's plan as "brilliant", "Presidential", or even "Courageous" - instead you settled for it being merely progressive and bold. I am being cynical of course - people like you give journalism a bad name.

[cynicalismo]

Do you have a real ressponse p our sleeve?

[cynicalismo]

Sorry about the letter dropouts. I'll reiterate.

Do you have a real response up your sleeve?

[yoyo1959]

NO, HE'S ACTUALLY A REAL JOURNALIST WITH CLEAR STANDARDS, UNLIKE YOUR FRIENDS IN THE 'MAINSTREAM MEDIA."

[fantanfanny]

Everyone should listen to Paul Krugman...he is the smartest guy in the room!!!

[TheInsomniac]

Krugman is in the MSM. He writes for the NYT, for Christ's sake. That's as establishment as the press gets.

[SeekerOne]

Here's a good article from the American Prospect on this topic:

http://www.prospect.org/cs/articles?article=obama_v_krugman

[sebocd]

Hillary can afford to be "bold and progressive." She has nothing to lose.

[cynicalismo]

really brilliant reaction. And why can't the guru of the new politics afford to be bold and progressive?

[S1m0n]

perceptive.

[swift goat pet for truth]

HRC is more progressive than Obama, across the board. And she always puts forth the more comprehensive plan, and the more progressive, liberal plan. And she always does this before Obama. That has been the history.

To be fair, John Edwards put forth better plans and faster than HRC.
But the MSM was not interested in reporting anything about Edwards except the price of his haircuts.

[jazzman]

Not according to Kuttner or Yglesias. Read for yourself.

http://www.prospect.org/cs/articles?article=obama_v_krugman

[riverhouse]

Hillary remains a Goldwater girl to this day. She's a neocon chest thumping warmonger, owned by special interests and lobbyists, devoted to deregulation, documented supporter of NAFTA. She really should be running with the McCain / Lieberman crowd, not on a Democratic ticket.

[ahmisk]

As an Obama fan, I've been very concerned about Krugman's continuous criticisms of Obama's economic policy. Simply because Krugman has been America's Liberal Oracle for a very long time. For almost my entire adult life, I have been hooked on his essays. His warnings on the asian economic bubble (pre asian financial crisis of 98), steps to contain the fallout from the ensuing financial crisis, warnings on the iraq war, warnings on the Greenspan Put post september 11 that created the housing bubble, warnings against the bush tax cuts and many other issues- they were all proven to be prescient. I still support Obama because he seems to have his heart in the right place, and because he's a liberal's liberal (most liberal senator, some say). But I still have the highest degree of respect for Paul Krugman. He has been among those rarest of columnists- one of those whose ideas have actually been substantive and prescriptive- as opposed to those pundits who just write a lot of fluff about nothing. Here's hoping that Krugman will finally prove to be wrong on one issue. After that, he can go back to being right about everything else.

[JeffinIllinois]

He sees that Hillary has a more comprehensive plan. Why can't you see that?

[AnninCA]

Because they would have to give her credit.

:)

[dadw5boys]

Stop Hillary Clinton and Stop National Health Care.

She can use the Economic crisis to get help from the finanicial community to secure National Health Care and get the HMO theives out of our pockets.

[BlackWidowPilot]

The only way you'll remove the thieves from the healthcare equation is by removing the for-profit motive from the doctor/patient equation.

The financial community has had *plenty* to do with the insurance industry running riot with America's healthcare, being shameless enablers of the "spiraling costs of healthcare" the corporate press so excuses with every editorial.

We already have government running police and EMS services, why not healthcare?

We still remain the only major industrialized nation without a national healthcare system.

Leland R. Erickson

Citizen

[mikeinvail]

Single Payer is the only correct answer.

[Manx]

One salient truth that Paul Krugman ignores: If Hillary Clinton continues her scurrilous, scathing scorched-earth campaign, which is hurting the Democrats and driving voters to McCain, neither Obama nor Clinton will become president and congress will not have a sufficient majority to implement mortgage crisis or health plan proposals.

[cynicalismo]

It is truly scurrilous to keep screaming, "Get out of the race. WE want to win!

[ruscle]

But it's not scurrilous for Clinton to say "As far as I know" (he's a Christian, but maybe not.) OR "He's not a college professor." When the university he teaches has confirmed that not only is he considered a professor, but he was also offered a tenured position (which he turned down because of his political commitments.)

?

[ruscle]

Krugman is thinking that HIllary's campaign promises are going to be her actual policies. It has been demonstrated that Hillary will say or do anything to get elected (The Obama isn't a College Professor lie - or - I dodged sniper fire in Bosnia.) Hillary's past votes put the lie to all the progressive posturing she's doing on the campaign trail. Does anyone believe her war vote was informed or progressive? How about her support of a Flag Burning amendment? Her support of using cluster bombs in civilian areas? Her Kyl-Lieberman Amendment vote? If her nature was to be progressive and wise, don't you think she'd be doing that long before she entered the race for the White House?

Even if Hillary WANTED to keep her campaign promises - she's not capable of it. You can't expect the rich donors who recently wrote the threatening letter to Pelosi to support Clinton as she lays down new business regulations. Or the corporations with which she is so closely aligned.

I'm sorry that Hillary supporters have had the rug pulled out from under them by Hillary's tactics, lies and screw-ups. And I almost feel bad for them. Until, like Krugman's been doing, they go out in public (from the NY Times to the blogs) and fantasize about her and her record so they can support her still.

[cynicalismo]

Before we get into Hillary's "actual policies," let's remember that we already know that Obama's actual "get-out-of-Iraq-quick" policy is not actually his "get-out-of-Iraq-quick" policy. And then there is Obama's dream of unifying Congress. Any erasure of he gap between Dems and Repubs can only come at the cost of watering down reform legislation to the inocuous.

[Whinger]

Krugman writes with pro Clinton bias, his impartiality is suspect, his credibility is in tatters.

[Ginko]

why because he doesn't agree with Obama's positions? So now Krugman is biased too? So you disrespect his experience and opinions? Figures. Experience and expertise means little to Obama supporters it seems. The fact that she is more "bold and progressive" is clear if you read all her policy positions.
I have a question for Obama supporters. How many of YOU carry your own health insurance now?How many of you have mortgages? My guess is very few, which is why these issues and the differences between the two candidates positions don't matter to you much.

[yoyo1959]

there are many bloggers/Americans who DO NOT want national health care coverage.....amazing but true!

[itmaybetoolate]

From previous columns by Krugman:

3-24: "Hillary Clinton...like Mr. Obama, has been disappointingly quiet about the key issue: the need to reform our out-of-control financial system...Both Democrats, by contrast, are running more or less populist campaigns. But at least so far, neither Democrat has made a clear commitment to financial reform...Now, the securities and investment industry is pouring money into both Mr. Obama's and Mrs. Clinton's coffers."

3-26: "OK, this is pretty dumb. Hillary Clinton wants a high-level commission to analyze ways to resolve the mortgage crisis -- including Alan Greenspan."

2-11: "One of the most hopeful moments of this presidential campaign came last month, when a number of Jewish leaders signed a letter condemning the smear campaign claiming that Mr. Obama was a secret Muslim. It’s a good guess that some of those leaders would prefer that Mr. Obama not become president; nonetheless, they understood that there are principles that matter more than short-term political advantage. I’d like to see more moments like that, perhaps starting with strong assurances from both Democratic candidates that they respect their opponents and would support them in the general election."

[yoyo1959]

THANK YOU, IMAYBETOOLTE! The Obamaheads have squishy stuff between the ears and can't judge true journalism and reporting if it hit them in the eye......THEIR HATRED AND NEGATIVITY WILL ULTIMATELY HURT THE DEMOCRATIC PROCESS.

[cynicalismo]

Stop whining, Whinger. Your test for impartiality, that only those who have kind words for Obama are impartial, tells us all we need to know about your remarks. Krugman's credibility is in tatters? The credibility of the one commentator who has consistently been spot-on, in tatters? Whose commentaries have you been following during the Bush years? You must have just gotten off the spaceship from Mars

[swift goat pet for truth]

Clinton is more wonky than Obama. Krugman is all about plans and always has been more progressive. He has ALWAYS been that way. HRC, also, has ALWAYS been that way.

Your analysis has no basis in reality.

[awb]

PART 4: last one

Unlike some of my friends, I have not fallen in love with Obama. I have been at this too long, and you risk getting your heart broken. I actually shared Krugman's critique of Obama's health insurance individual mandate and his proposal to tax the upper middle class to pay for a much exaggerated Social Security shortfall that is more like a rounding error. I simply conclude, based on what I've seen, that Obama is capable of real learning and real transformation, both of himself and of public opinion. Nothing I've seen suggests that's true of Hillary Clinton.

But Krugman, ordinarily an ornament of fair-minded progressive economics commentary, writes almost as if he has become part of the Clinton campaign. His latest characterization of Obama's proposals in commenting on the New York speech -- "cautious and relatively orthodox" -- was preposterous. Even if Krugman's sympathies are with Clinton, he owes it to his readers and to his own credibility to play it straight and credit Obama with a breakthrough when credit is due. This was surely one of those times.

[AurigaRa]

not falling in love...a good tactic if you can actually believe that will carry out all the plans they propose.
Either of them will have MANY problems to overcome before they can take one step. No guranatees on anything. But one gets me excited enough to believe there WILL be progress.
.
So I'm going to go ahead and fall in love. Its more fun.

[Ginko]

falling in love has no place in a presidential race