There is something conspicuously absent from Treasury Secretary Timothy Geithner’s comments before the Senate Banking Committee on how President Barack Obama’s fiscal year 2013 budget will boost the American economy: Housing.
Oh, wait, nevermind. Wrote to soon. Actually, in Geithner’s 4,354-word written testimony to congress, 100 words — that’s 2.3% — were devoted to the housing mess.
Here’s what he said:
“While the economy is regaining strength, we still face significant economic challenges. Unemployment, at 8.3%, is still far too high, and the housing market remains weak.” (Six words in the testimony’s second paragraph)
“Second, we must continue to work together to support the housing market, whose weakness is a stress on millions of families and a drag on overall growth. To this end, the president recently announced new policies designed to aid the housing market, including broad-based refinancing for responsible homeowners that would save the typical family $3,000 a year. We are also working with the Federal Housing Administration and Federal Housing Finance Agency to take a range of steps to improve access to mortgage credit, and the FHFA also recently launched a pilot program to convert foreclosed homes into rental properties.” (94 words in the conclusion)
Again, 2.3%
Geithner’s prepared testimony and the questions from Congress focused on education and training, innovation and manufacturing, infrastructure, spending cuts and A LOT on tax reform. These are all crucial to reviving the American economy and boosting our long-term competitiveness in the global economy. But Geithner said in his testimony that the president’s “budget proposes three specific steps to boost growth and secure the United State’s position as the most competitive economy in the world.” And not one of these steps addressed the siginificance of housing in boosting growth.
And this begs the question: Where on the White House’s priority list of matters in need of repair to ensure the short- and long-term health of the country is housing? So improving access to education and job training — one of the budget’s three specific steps — is higher on that list. Education and job training should be a perpetual goal for the nation, regardless of the health of the U.S. economy. But there are more urgent matters at hand.
What’s more relevant now is housing — an industry whose rehabilitation is essential to regaining our economic strength. The White House, according to its proposed fiscal 2013 budget doesn’t agree.
Not that there aren’t steps being taken. We finally saw the 16-month multistate attorneys general mortgage servicing settlement conclude. The Department of Housing and Urban Development will announce smaller settlements with mortgage servicers and additional insurance premium increases to cover a $688 million hole at the Federal Housing Administration. And the Consumer Financial Protection Bureau is seeking industry feedback on a prototype monthly mortgage statement that provides borrowers with more detailed information about their home loans.
But to not address this meaningfully within the upcoming budget as one of the main steps to boost the nation’s growth and economic security exposes the White House’s view of the housing debacle as just a side issue, something that can be half-ignored while it works to address the real problems.
The absence is not just a symbol of the lack of the appropriate level of seriousness to which the White House views housing as a tool to bolster and eventually revive the overall economy, but also another indication that politicians on both sides of the aisle (no senator questioned Geithner on housing during the hearing, nor did Geithner raise the issue) don’t possess the investigative curiousity and political willpower — or even the guts — to reform the nation’s housing sector.
