Obama's Conservative Economists

This week's Nation magazine is running a piece by the head of its intern program, Max Fraser, in which he suggests that the economic advisors who are assisting Senator Obama's campaign are helping him stake out a position on the subprime lending crisis 'to the right of not only populist Edwards but Clinton as well." Fraser notes that Obama's proposed solution to the mortgage mess is "short on aggressive government involvement and infused with conservative rhetoric about fiscal responsibility." He states that Obama has not called for a moratorium on foreclosures or a freezing of interest rates or the use of federal subsidies to help homeowners keep up with payments and restructure loans or some regulation of the financial industry -- Edwards and Clinton have offered variations on those themes. Instead Obama has proposed legislation against mortgage fraud, a tax credit for homeowners which amounts to about $500 on average and an additional fund that will help a certain limited number of homeowners. Fraser attributes Obama's constricted response to "the centrist politics of his three chief economic advisors and his campaign's ties to Wall Street institutions opposed to increased financial regulations" and points out that Obama has received almost $10 million in contributions from the finance insurance and real estate sector through October 2007. For the candidate of change and bold ideas, Obama's tepid response to the overwhelming mortgage crisis suggests a Republican-orientation rather than a Democratic one -- and should be subject to debate in the remaining presidential primaries.

Comments

[gamoonbat]

Obama has been very clear to separate the tax relief plan in the short term from what might solve the housing and banking sector problems in the long term. This plan is just to give a kick to the retail and small business economy.

I think that Edwards' populism is the most at odds with the economic thinking of the other two candidates. However, I do not really think Edwards ideas are realistic in the current global economic situation. Obama is a progressive but a realist, which is basically the approach that the Clinton administration took when it grew our economy for eight years in the 1990's.

[westview]

I am very sad to see another worshipper of the Milton Friedman school of economics rising up to power. That gentleman was the neo-con poster boy of failed economic models. The one we have now is a classic example.

[wizoz]

The Republicans want to go against Hillary. Her solutions are MANDATE interest rates, MANDATE Health care. These solutions focus on the symptom not the problem. The problem was cheap credit prompted by the Federal Reserve and the ever expanding National debt.

Americans seem to believe we can have a costly war without any economic impact. Empires have usually failed because they bankrupted themselves on forign wars. The Romans, the French, the English, even the Soviets fell to the hubris of foreign intervention. The cost of supporting, through debt, a huge military and an Iraq war that will cost TWO Trillion before we get out is what will defeat us.

There is no free lunch. Irresponsible spending by individuals and government is the cause of the current economic meltdown.


What we have is an econmic hangover. My dollar buys at least 10% less internationally. Oil and housing costs have doubled. These are the real costs of the debt.

All Obama is saying is our country is based on Capitalism and we shouldn't bite the hand that feeds us. We should make the capitalists work for us by incentivizing not mandating. If that makes him "conservative", OK. We need someone who can make the old classifications moot.

[Boadicea]

More Clinton crap. Sigh....

The Washington Post economist panel gave Obama's plan an A- and Hillary's plan a C+. Others have given Obama high marks as well.

I for one do not want a Democrat who is going to raise my taxes exponentially to pay for the mistakes of subprime lenders and their prey.

Get over it. Obama's got a good plan that has more than a snowball in hell's chance of passing, unlike Hillary's "get the taxpayer to pay for it" approach.

[Issak]

Any real progressive worth their salt- who wants to pay attention-can quickly note the wink and nods Obama has been sending the right. The real mystery is; how come so many don't see it?

I guess people want to see what they want to see - the grand delusion that because this man's skin can block vitamin D better than those with lighter complexions - that -by golly! he must be an agent for "change".

Meanwhile a whole new slew of believers will be rudely awaken to the fact that the more things "change" the more they remain the same.

[SharedGrowth]

The candidates all seem to be missing the point. The government is already engaged in heavy deficit spending, the Fed has lowered interest rates to a point that has the dollar in freefall, and consumers are already maxed out on debt. What further levers can we pull to get ourselves out of the ditch?

The one obvious strategy is the one everyone ignores – stop penalizing corporations for putting activities in the U.S. Under current tax policy, a corporation can make 54% more profit operating in the Dominican Republic than in the U.S., even before considering the much lower wage rates abroad. We can reverse that incentive, and we can do it in a way that is revenue neutral, that favors the middle class, that encourages savings, and that reduces rather than increases corporate power. How? By allowing a deduction for dividends paid to shareholders, with the revenue offsets explained at www.sharedeconomicgrowth.org.

It’s time to demand that our political representatives drop their canned speaking points and take real action to improve the long term health of our economy.

[blackpope]

Yes he's plan is conservative and the real solution to the dog-on problem....if you listen closely to bernanke or pay close attention to the economic situation, we are battling two problems: mortgage crisis/economic downturn and ALMIGHTY INFLATION. The funny relationship between these two is that the cure for one is the feeder for the other. What we need is a balanced economic plan, not one that is massively tilted to solve one of the problems and that would only land us in a bigger pot of soup!!! That been said, i hope you see again an exercise of good judgement on the candidate's part

[MPeter]

You wanna see exactly how Liberal the Clintons are or why there is nervousness around them? Go read this editorial.
http://www.washingtontimes.com/article/20080124/EDITORIAL/774081954

[GhostOfSchlesinger]

When you take a complex problem like the mortgage crisis, you need to approach it from all sides, as there is simply not enough money in our ENTIRE domestic budget to perform the type fix the author disingenuously advocates.

The whys of the mortgage crisis?

-> Subprime lenders (particularly brokers or companies large enough for a small warehouse line) didn't just lie to consumers - they lied to the folks that bought their bundles; the larger institutional lenders. How? Well, as we know via multiple scandals, documents were literally forged - income, assets, and debts.

-> The "Refi Boom," which encouraged the unethical practice of cooperation between mortgage brokers and property appraisers, artificially ballooning home prices just as the money got tight. Indeed, the "easy credit" mentality of ALL OF US caused us to view our homes as piggy banks, hence, a bandaid on revolving debt.

-> The Builders & the "Flippers" - 'Nuff said.

FINALLY, the law of unintended consequences dictates the fact that the housing market is not an island unto itself that has no impact on the larger economy. Remember how well rent controls worked in New York City? And that was just one city. Freezing interest rates is no worse than the "voodoo economics" of the Reaganites.

What the author apparently doesn't know is that BANKS DON'T WANT TO FORECLOSE on folks' homes. Why? Because everybody gets soaked - the homeowner the worst, but the bank, too, because they will never recoups their original investment.

YES, we should help homeowners that are in trouble.

STRICT INDUSTRY REGULATIONS - YES
TEMPORARY HELP WITH MORTGAGE PAYMENTS - YES
A GENERAL CAP ON INTEREST RATES - NO
A MORATORIUM ON FORECLOSURES . . .

That last one sounds great, but what will it do to the market? What sort of consequences might be associated with a policy that encourages the worst in the worst of us while only temporarily aiding the best of us? Is there a better way to approach this - one that looks at the larger equation AND protects the homeowner? I mean, I'm sure it will win votes, but it doesn't have the ring of smart policy.

[MartiP]

Obama is a huge recipient of money from Goldman Sachs and the investment banking industry. Huge.

http://www.opensecrets.org/pres08/contrib.asp?id=N00009638

This guy is no liberal, has no love for the wage-earning working class. It's all smoke and mirrors.

[TXfemmom]

Look, all of us need to face the face that GREED drives business here in the United Staes and there need to be strict controls and oversight on it. The Republicans opened up and made it the Wild, Wild West for the Savings and Loans, and it COST US BILLIONS. Then, not having learned anything, the Republican Congress, led by Gramm and Gingrich, decontrolled all the energy and trading and WE GOT ENRONED. Then, they failed to control, along with the FED, the unparalleled corruption and Wild, Wild West of this, and it has the very basis of our economy teetering, along with corrupt oil prices which are unwarranted, and ONCE AGAIN THE PUKES DID IT.

Capitalism only works when GREED IS CONTROLLED TO PROTECT THE INNOCENT FROM THE CRIMINALS, AND BIG BUSINESS IS ALL ABOUT CRIME AND PROFITS AT ANY COST.

[nosanity]

nobama , Bush's personal rubber stamp brought to you by the capitulation wing of the democratic party . You know them as the losers { Kerry , Gore , Dean , Reid , Pelosi , Mccaskill , Landrieu , Nader }

[altohone]

Schlesinger-

First of all, please do tell us-
Is our current economic policy conservative or liberal?

If it's conservative, why is Hillary on record voting for it?

Do conservatives think Bush's economic policy is conservative?

Do liberals think Hillary's vote for the bankruptcy bill was a vote for MORE liberal policies or less liberal ones?

Was Bill Clintons tax cut for the rich a conservative or liberal policy?

Were the economic implications of a war of choice liberal or conservative?





Face it.
Both Bush and Hillary are big government establishmnet corporatists.

Trying to paint Hillary's policies as liberal and Obama's as conservative has ZERO relevance without a comparison to reality. Such a comparison would show your post reaches a conclusion unsubstantiated by the facts.

[mawrm]

Federal subsidies to help rescue home buyers? So take other folks hard-earned tax dollars to pay for other people's homes that they bought beyond their means to pay for?!? And moratoriums on foreclosures would do what exact? Sure, people get to say in their home a few extra months before they get kicked out -what the hell kind of "solution" is that? It's not like the debt will disappear. For most people it will take more than a few months to gain enough financial leverage to able to pay down their debts. The only thing that makes sense at this point is to legislate against mortage fraud, offer a tax credit to give folks a little "hold over" money, and to perhaps encourage banks/mortage houses to offer better refinancing options to homeowners (you CAN'T legislate this in a free market economy), which is exactly what Obama is proposing. You simply can't have the government bail out consumers for uninformed spending choices. Further the problem is home values are still in flux and are not uniform across the country. With your federal subsidies scheme, in the long run, you're actually doing more to reward those who sold homes at inflated prices versus helping the buyers. You'd have to pay tens of thousands more to keep someone in their home in California whereas the guy in Georgia might only need a few hundred to get by. That means "poorer" states are subsidizing the excesses of "richer" states. Doesn't sound like a fair plan to me. With Obama's proposal, you get the market correcting effects that needed to happen long time ago - it forces home prices down to their fair value, it forces banks and others to lend money responsibly because the government isn't going to pay for their shady schemes.

[MoNut]

Hillary Clinton's donations from Citigroup leave the question of how those donations could affect her approach to "solving" any subprime issue.

Since she doesn't really allocate any of the money in detail on her stimulus plan... Is it another Citigroup bailout with crumb droppings for their foreclosed victims?

Keep in mind, this crisis is not one that just appeared with George W. Bush. The seeds were planted even before Clinton and sprouted up increasingly during his tenure after the S & L Scandal. The banks leeched onto these to pull themselves out of S & L and grew throughout the rest of Clinton and up til now.....

So we can't be partisan about blame.. nor should we allow any candidate to claim the same. If they do, they're fundamentally lying.

That being said, nothing is going to solve the subprime crisis if it's going to be a bailout and back to business as usual. Some ruler-to-the-hand action on these banks and lenders should be mandatory.. as well as some sort of hand to those who found themselves victim to terrible business practices.