But there’s every reason for political reporters to follow the lead of the AP and the outlets it cites here, and do what they can to force housing onto the candidates’ agenda. (That goes for coverage of the incumbent in the White House, too.) Partly that’s because of the human suffering and the damage to local and regional economies that results directly from the foreclosure epidemic. More broadly, it’s because the housing crisis is inextricably linked to our ongoing economic struggles. When the bubble popped, a whole lot of people discovered they weren’t as rich as they’d thought, and found their mortgage debt—incurred during the boom years—looming larger than they’d anticipated. Even people who weren’t at immediate risk of foreclosure have sharply cut back on consumer spending to focus on “deleveraging”; that sucks money out of the economy, contributing to widespread job losses from which we’ve yet to recover. Meanwhile, with prices still falling and access to credit for prospective buyers extraordinarily tight, we’re witnessing a historic collapse in new homebuilding, which devastates the construction sector.
It’s true that there are different ways to try to address this debt overhang and restore demand, some of which don’t depend on housing-specific policies. For example, liberal blogger Matt Yglesias recently wrote that he’s not enthusiastic about “targeted debt relief” because it raises “fairness, moral hazard, and time-consistency problems”—that is, all the things that make the politics of housing hideous—“that can be avoided with broader based stimulative ideas.” Instead, Yglesias is a persistent proponent of suddenly fashionable NGDP targeting, an approach to monetary policy that aims for real growth but will tolerate higher inflation, which serves as untargeted debt relief.
While that sort of approach isn’t targeted to distressed homeowners or mortgage debt, it’s responsive to the ways in which the housing crisis is weighing down the U.S. economy. That’s not something that can be said, at this point, of the plans (or non-plans) offered by the GOP contenders. Good catch by the AP, and let’s see more of this over the course of the campaign.