In another vein, we could use continued press attention to the point that Binyamin Appelbaum makes in The New York Times, which is that the story Romney and his GOP rivals tell about the roots of the housing crisis doesn’t hold up. Here’s Romney:
And the reason we have the housing crises we have is that the federal government played too heavy a role in our markets. The federal government came in with Fannie Mae and Freddie Mac, and Barney Frank and Chris Dodd told banks they had to give loans to people who couldn’t afford to pay them back.
And here’s Appelbaum:
There is a basic problem with the argument, made by several candidates, that the government forced mortgage lenders to make bad loans: most subprime loans were made by companies that were not subjectto any kind of federal regulation
Fannie Mae and Freddie Mac, the government-backed mortgage finance companies, did provide financing for large numbers of subprime loans, mostly by purchasing mortgage securities for their investment portfolios. But the historical record shows that they came late, diving into subprime lending because private companies were stealing their business and profits. As such, most experts have concluded that Fannie and Freddie helped expand the bubble but did not create it.
Correctly identifying the roots of the subprime crisis may or may not tell us how to get out of the economic mess it created. But at the least, it can help us avoid another one.
The High Price of Higher Ed
While the CNBC crew did good work, one of the missteps occurred when a moderator cut Perry off while he was actually saying something interesting. The subject was the exploding cost of higher education, and the commensurate exploding levels of student debt. Perry asked the right question, which is, “How do you force these universities to be efficient?” And he offered a couple answers, including heightened gubernatorial pressure at state schools and increased use of technology. Meanwhile, Newt Gingrich and Ron Paul said some nutty things, but they also argued, plausibly, that federal subsidies have led to higher tuition.
It’s possible that none of those three will be seriously contesting the nomination for much longer (if they ever were), but political reporters shouldn’t let this issue drop. While neither the primary nor the general election is likely to hinge on anyone’s policy position on this issue, the cost crisis in higher education looms as an obstacle to our long-run economic growth. The press should keep the issue on the agenda, and press candidates from both parties for solutions.
What to Do About China?
One of the most interesting parts of the debate came at the end, when Romney and Huntsman sparred over how to address alleged unfair trade practices from China. Romney accused China of “cheating” said he was prepared to impose tariffs on Chinese goods to ensure “a level playing field”; Huntsman countered, “that’s not a good idea,” though he didn’t take the moderator’s invitation to accuse Romney of “pandering.”
It’s an emotionally loaded issue, one that invokes notions of fairness and national rivalry—and also one that doesn’t necessarily break down on partisan lines. But follow-up reporting here could try to take a clear-eyed look at who, exactly, the beneficiaries and victims of China’s actions are, and whether that picture complicates or confirms the candidates’ views. In a brewing dispute about China’s “dumping” of solar panels, for example, U.S. manufacturers are pushing the federal government to impose steep tariffs, while buyers, installers, and environmental groups are happy to let China send us cheap hardware.
There were other interesting moments too—Rick Santorum’s pitch for blue-collar industrial policy; Romney’s proposal for further middle-class tax cuts and his more equivocal stance on the payroll tax holiday. Even after Perry’s gaffe is fully digested, there’s plenty for the press to chew on here.