Barack Obama was back on the road this week. The tour bus was gone, but otherwise there was barely a hint he was doing anything other than taking another taxpayer-funded campaign swing through the states that will be key to the 2012 election.
You can tell it by his choice of destinations. Since Sept. 1, Obama has visited five of the six states where his 2008 margin of victory was narrowest: North Carolina (twice), Florida, Ohio (twice), Virginia (twice) and Colorado (twice). Add to that list Missouri, the site of his closest loss to John McCain, and potential battleground states Nevada, Michigan (twice), New Jersey and Pennsylvania.
But mostly you can tell it by his messaging. On this week’s trip out west, Obama broke out his latest three-word slogan: “We can’t wait” — for members of Congress to take the initiative. But, as Politifact recently reported, members of Congress have introduced dozens of bills related to jobs and the economy this year. It’s more like “He can’t wait” — for his re-election prospects to brighten.
(In neither case, one assumes, does the White House consider “Yes, we can!” an appropriate response.)
Politics aside, the substance of the “We can’t wait” campaign is what’s disturbing. And that’s not only because the president is seeking to bypass the legislative process via executive orders to change existing policies originally approved by Congress. It’s also because Obama’s two latest programs repeat the mistake of spending billions to tweak the economy around the edges.
In Nevada, home of the nation’s highest foreclosure rate, Obama announced changes to a program to help homeowners who owe more on their mortgages than their homes are worth. Obama wants to allow these homeowners to refinance their mortgages at today’s low rates, regardless of the value of their homes. The idea is that they will have lower monthly payments, and they will direct the savings elsewhere in the economy.
It’s stimulus by another name, with the same problems. First, it assumes all of the monthly difference will be spent, not saved. History suggests that won’t happen.
Second, one man’s liability is another man’s asset: the lender’s. So, the plan assumes the money added to the economy by homeowners won’t simply be subtracted from the economy by lenders.
At least, it would make that second assumption if private lenders were involved. The chief lender here is the taxpayer, via Fannie Mae and Freddie Mac: A loan must be held or backed by them to qualify. Any banks that hold affected mortgage notes may be inclined to reduce their lending. Otherwise, it’s added to Uncle Sam’s tab.
But fear not: The program is limited to homeowners who are current on their payments. While this requirement reduces taxpayers’ exposure, it also restricts the number of people who could apply — to as few as 800,000, for a total difference of $2.4 billion per year, according to an estimate by financial expert Peter J. Wallison.
So, it’s another couple of billion bucks piled onto the debt, without adding much bang to the economy.
The other change sought by Obama concerns student loans. The total school-related debt for U.S. college students and graduates is about to eclipse $1 trillion, or more than Americans owe on our credit cards. In Colorado Wednesday, Obama said he would reduce the minimum payments borrowers must make on their federal student loans, to 10 percent of annual earnings from 15 percent.
Again, this may make a difference for some people struggling to make ends meet. But it will cost them more, for longer, without significantly boosting the economy. And it won’t address the real reason student debt has grown so large: skyrocketing tuition and fees.
I have to hand it to Obama, however. Homeowners who have kept up their mortgage payments strike me as the kind of people likely to vote. And Obama’s re-election chances depend in no small part on keeping young people on his side.
But what would really help them, and the rest of us, is an economy that’s growing and producing more jobs and higher incomes. Obama’s latest electioneering won’t stimulate that.
– By Kyle Wingfield