Audit Notes: Economic Policy Edition

Ezra Klein, in his long story (which you should read) on why and how Obama’s economic policy failed (I should add, at least failed to get the economy out of the much. It did prevent a much worse crisis), reports that McCain’s top economic adviser was far more radical than Obama about fixing the housing and debt crisis:

In late 2008, when the economy was cratering, Holtz-Eakin convinced McCain that the way out of a housing crisis was to tackle housing debt directly. “What we proposed at the time was to buy up the troubled mortgages, pay them off and let people refinance at the lower rates,” he recalls. “That would have filled up the negative equity and healed bank balance sheets.”

To this day, Holtz-Eakin thinks the proposal made sense. There was one problem. “No one liked that plan,” he says. “In fact, they hated it. The politics on housing are hideous.”

The Obama administration, perhaps cognizant of the politics, was not nearly so bold. It focused on stimulus rather than housing debt. The idea was that if people could keep their jobs and pay their bills, they could pay their mortgages. But today, few on the Obama team will mount much of a defense of its housing policy.

Its efforts to heal the troubled market at the core of the financial crisis are widely considered weak and ineffective. The Home Affordable Modification Program, which proposed to pay mortgage servicers to renegotiate with financially stressed homeowners, couldn’t persuade the servicers to play ball and so has left most of its $75 billion unspent. The Home Affordable Refinance Program was projected to help 5 million underwater homeowners. It has reached fewer than 1 million.

— Mike Konczal makes a very good point about Klein’s wonkery:

The piece is quite consciously avoiding the narrative, storytelling approach to politics and the Presidency. It reads as almost the mirror-image of something like Drew Westen’s approach to how Obama did on the economy - Obama’s passion isn’t in question here. In Klein’s piece it is all projections based on available evidence, political possibilities given political constraints and negotiating with hostile counterparties.

Konczal also writes that, in forgetting the mass debt reliefs yore, we’re not only “forgetting things since Keynes, we are also in the business of forgetting things from the 19th century.”

— And here’s Michael Hardt and Antonio Negri in Foreign Policy on Occupy Wall Street:

One obvious and clear message of the protests, of course, is that the bankers and finance industries in no way represent us: What is good for Wall Street is certainly not good for the country (or the world). A more significant failure of representation, though, must be attributed to the politicians and political parties charged with representing the people’s interests but in fact more clearly represent the banks and the creditors. Such a recognition leads to a seemingly naive, basic question: Is democracy not supposed to be the rule of the people over the polis — that is, the entirety of social and economic life? Instead, it seems that politics has become subservient to economic and financial interests.

Not just from the perspective of the left, of course. See Dana Milbank:

Lawmakers, including the overwhelming majority of Tea Party Republicans, voted in support of the three trade deals, which had been at the top of corporate America’s wish list.

That was just one of the day’s party favors for corporations. Hours earlier, House Speaker John Boehner made clear he would guard the corporate elite’s interests in avoiding a trade war with China…

For all the talk of populist foment - the Tea Party on the right and the new Occupy Wall Street movement on the left - business interests remain firmly in control. Forced to choose between their voters and their donors, lawmakers don’t hesitate before choosing the latter.

There is little doubt about where the Tea Party faithful stands on free trade. A year ago, a Wall Street Journal-NBC News poll found that 61 percent of Tea Party supporters thought free-trade agreements had hurt the country, compared to 53 percent of Americans overall who held that view. Shortly after that, a Pew Research Center poll found that only 24 percent of Tea Party supporters thought free-trade agreements were good for America.

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

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: , , , ,