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It's Construction, Stupid! It's Home Building, Stupid!

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In Thursday's address to Congress, I want President Barack Obama to emphasize that fixing the home-building and construction industries is necessary to jump-start our lame economy. That is because, in my recollection, home building and construction have led us out of every recession since the 1960s, when I financed land acquisition, development and construction of tract homes.

"It's the economy, stupid." That was Governor Bill Clinton's mantra in 1992, when he was vying for the presidency. His opponent, the incumbent George H. W. Bush, danced around the edges of our country's economic woes and lost the election. More recently, Clinton offered his suggestions to fix the economy. But resolving the loss of construction and home-building jobs was not front and center.

Unless Obama gets specific and tells the American people that he knows how to fix the foundering construction and home-building industries, he will also lose -- and so will we.

"The history is that housing has led the country out of recessions until this one," said John Wieland, the award-winning founder of John Wieland Homes and Neighborhoods, a major Southeastern residential developer, in an interview with the Atlanta Journal-Constitution. "It didn't happen this time because of the air coming out of the housing bubble."

He continues: "We have this tremendous amount of resale homes, short sales, that just flooded the market."

So the sooner we solve the housing problem and get the building trades back to work, the sooner our economy will be off life supports. Wieland told the Atlanta Journal-Constitution that the lack of new "housing has kept us in this recession."

Obama has to tell Congress how to resolve the shadow inventory of homes being dumped on the market. He needs to address the two-year backlog of houses in the foreclosure process and the groundswell of litigation against lenders.

In a March presentation to Congress, David Crowe, chief economist of the National Association of Home Builders, said, "Without access to credit, the residential construction industry will lose more small businesses and experience more job losses, with these impacts being widely spread across the nation."

That is because housing represents a huge part of the nation's Gross Domestic Product. "When you consider the enormity of the total number of jobs attached to housing, a sector that accounts for 15 percent of our nation's GDP," Crowe says, "now is hardly the time to step back from our nation's long-standing commitment to homeownership."

Although Congress is not stepping back from its commitment to homeownership, there is serious talk going on about reducing or eliminating the homeowner interest deduction. "A rollback of the mortgage interest deduction as proposed by the commission would have a devastating impact on both present and future homeowners in this country," said Michael Berman, chairman emeritus of the Mortgage Bankers Association of America. "It would immediately stop in its tracks any stabilization we are seeing in the housing market and would effectively increase the cost of homeownership for millions upon millions of people."

Furthermore, if implemented at this time, provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act could exacerbate the tight credit markets, as well. Even though the legislation was intended to prevent future real estate debacles and financial abuses by the lending industry, the same financial institutions that got us into this mess can help get us out of it.

More specifically, Berman says that the requirement for mortgage-backed securities issuers to retain a five-percent stake against potential losses to investors will keep private capital on the sidelines -- just when we need it most. He is also concerned that Dodd-Frank will cause borrowers to flock to the Federal Housing Administration's low down-payment loans because they will not be able to cough up 20 percent for the conventional alternatives. The Mortgage Bankers Association "is concerned that the FHA programs will be over-utilized," he says.

Advanced reports of Obama's Thursday speech suggest that he will tinker around the edges by asking Congress to increase spending on infrastructure projects, extend unemployment benefits and provide tax incentives for businesses to hire more employees. "The executive branch has certain things it can do," White House spokesman Jay Carney says without being specific. "I don't want to ruin the surprise."

But unless the surprise includes stimulating the home-building and construction industries, the unemployment rate will remain untenably high for an extended time.

Jerry Chautin is a volunteer SCORE business counselor, business columnist and SBA's 2006 national "Journalist of the Year" award winner. He is a former entrepreneur, commercial mortgage banker, commercial real estate dealmaker and business lender. You can follow him on Twitter @JerryChautin.