No Housing Crisis for Bush, McCain’s Got No Plan to Improve Economy

[Omaha Steve]

http://blog.aflcio.org/2008/05/09/no-housing-crisis-for-bush-mccains-got-no-plan-to-improve-economy/

by Tula Connell, May 9, 2008



* Housing crisis? What housing crisis? Looking out the White House window, Bush can’t see one, so it must not be there. Because why else would he threaten to veto Democrats’ housing rescue plan, aimed at preventing foreclosures and stabilizing the housing market? Even congressional members of his own party are signaling support for the measure (not that it’s an election year or anything). Yet the Lame Duck-in-Chief is calling the plan to help troubled homeowners “a burdensome bailout that would open taxpayers to too much risk.” Unlike the $5 trillion experts predict we’ll spend on the Iraq war. Or the $30 billion bailout to Bear Stearns.

* If Bush doesn’t think the nation’s homeowners and consumers need help getting by, maybe he should talk with retiree Josephine Powe, a member of the Alliance for Retired Americans. Says Powe: “An extra dollar or two per gallon may not seem like a lot of money to a big oil executive, but to a senior on a fixed income, it is everything. When our costs go up and our income does not, that dollar means you don’t know if you’re going to have enough money to buy food after you fill up the tank.” Powe testified this week on Capitol Hill in favor of the Consumer-First Energy Act, introduced by Senate Democrats, which would lower prices by placing a 25 percent windfall profit tax on any energy company that doesn’t invest in new energy sources and end $17 billion in tax breaks for Big Oil.

* With house prices sinking and the number of foreclosures worsening, consumers are relying even more heavily on credit cards to get them from paycheck to paycheck. Consumer borrowing rose in March at the fastest pace in four months, more than double the increase of the previous month, according to the Federal Reserve. Consumer debt totaled $15.3 billion at an annual rate in March, much bigger than the $6 billion increase that economists had been expecting. Said Mark Zandi, chief economist at Moody’s Economy.com: “This represents distressed borrowing. Consumers need cash and they have turned back to their credit cards to fill the void left by lost jobs and weaker incomes.”

* It may be hard to feel sorry for all the U.S. companies going bankrupt, but their demise means tens of thousands more workers are out of a job. Already this year, 27 U.S. companies have defaulted on their debt, according to Standard & Poor’s, exceeding the 16 companies that defaulted in all of 2007. A rash of corporate bankruptcies likely is the nation’s next big financial crisis: Bankruptcy experts say the uptick in defaults is just beginning because massive amounts of debt will come due at a much faster pace in about a year. “The flood hasn’t come yet, but the leading wave of the flood is in sight,” says Martin Zohn, head of the bankruptcy practice at law firm Proskauer Rose.

* More evidence that those with jobs are producing more but wages aren’t keeping up. In fact, this has been the case for more than 30 years, which is why the current economic mess is a sign of a much deeper economic imbalance.

But maybe all the above is just a collective national hallucination. After all, Sen. John McCain has claimed we’ve actually made economic progress these past eight years—and that the economic difficulties experienced by working families are merely “psychological.” Would be nice if he offered a plan for economic recovery instead.