Audit Notes: One Termer, HAMP Dwindles, The Crisis Narrative Shift

These two graphs from an NYT story this weekend pretty much show why Barack Obama is going to be a one-termer:

Mr. Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. These include free trade agreements and improved patent protections for inventors.

But others, including Gene Sperling, Mr. Obama’s chief economic adviser, say public anger over the debt ceiling debate has weakened Republicans and created an opening for bigger ideas like tax incentives for businesses that hire more workers, according to Congressional Democrats who share that view. Democrats are also pushing the White House to help homeowners facing foreclosure.

If the Times is right, and there’s no reason to doubt them with Obama’s track record, his “radical” option is proposing some tax incentives for businesses that hire more workers. This in an economy that’s had 9 percent-plus unemployment and 15 percent to 17 percent U-6 unemployment for three years, and which may be tipping back into recession.

Free trade agreements, based on their track record, will likely drain jobs. And patent protections for inventors? Political gold!

— About those foreclosures: You can’t fix the economy until that problem goes away. And The Huffington Post’s Arthur Delaney reported last week that HAMP trial modifications have all but dried up, hitting their lowest monthly total since April 2009, shortly after the Obama administration’s poorly performing program started.

Since the Home Affordable Modification Program launched in the months following President Obama’s inauguration, nearly 870,000 struggling homeowners have been kicked out of the initiative, while just 657,044 remain in permanent modifications.

For eligible borrowers, HAMP lowers monthly payments to 31 percent of their monthly income by reducing interest rates, extending the term of a loan and temporarily forbearing payments. If a borrower successfully makes reduced trial payments for three months, the modification is supposed to become permanent — but in its early history the program has been notorious for its drawn-out and often hopeless trial mods.

— Matthew Goldstein of Reuters steps back a bit and marvels at how the narrative of the crisis shifted:

Somewhere, somehow, the narrative of the worst financial crisis since the Great Depression changed. Not too long ago, all the talk was about exotic securities backed by crappy mortgages, inadequate bank regulation, excessive CEO pay and burdensome consumer debt. Now the conversation in Washington and Wall Street is more focused on overly generous pensions for public employees and the levels of government spending on the poor, for education, new roads and middle class health benefits.

This isn’t too say that runaway government deficits aren’t a problem that need to be addressed-most likely with a combination of tax hikes and spending cuts. But the financial crisis didn’t begin in summer 2007 with concern about government spending…

The truth is that much of the current government debt crisis is simply another by product of the financial crisis-a crisis that we all played a role in bringing about. So if we are to get out of this financial slump anytime soon, it’s important to stay focused on how we got here.


Sorry to be cynical about the “why,” but there’s a lot more money behind one argument than the other. It bankrolls legions of flacks, think tank fellows, media corporations, political action committees, and lobbyists who have done a tremendous job of shifting the narrative.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,