The President's $50 billion infrastructure plan is nice. But, it requires Congressional approval (which he will not get) to become actual policy. And, while it is good public policy, good for the economy and creates jobs -- even if it somehow miraculously passed, it has limited political value for two reasons:
- Whatever jobs it creates will not come in time for the November election.
- The actual benefits of the plan will not be obvious -- or would be tangential to voters. Thus, they can be distoprted and demagogued by the GOP and the conservative media.
So, the President needs to put forward some bold ideas that can both be implemented without any Congressional approval, but also will be of obvious direct tangible benefit to voters. With that in mind, here are my ideas:
- Fannie Mae, Freddie Mac and the FHA own about 90% of all mortgage paper in the United States. There are already tens of billions of dollars appropriated that could be used to completely revamp the moribund and ineffective HAMP program. My proposal is simple: Cost free refinancing of every single Fannie, Freddie and FHA mortgage in the U.S. for homes that are underwater (or where the loan to value ratio is greater than 85%), also the principle residence of the owner, and where the owner is not behind in their payments.
Currently, there is a Federal refinancing program similar to what I am proposing. But, it is being administered through the Bailout banks, mostly, and each bank charges huge refinancing fees, and takes forever to process the refinance. My proposal is to cut out the refinancers (and/or the fees) -- and negotiate directly with homeowners to do it without charging a fee.
This would have a massive stimulus effect on the economy. It would free up hundreds of billions of dollars that are currently going to pay off mortgages and put that money directly into the pockets of consumers who will now be refinancing at the current very low interest rates. Not only that, the mortgage rates should be locked in for 180 days when an applicant seeks the refinance. I'm not certain of how the mechanics of this would work -- but I believe that this can be done either by a regulatory mechanism through the federal reserve or by the FDIC which would require servicers to waive their refinancing fees for the next 24 months. Or, alteratively, hiring people directly to handle the processing.
The political benefits fo this program are obvious. Homeowners vote in higher proportion than just about anyone. And, this will directly benefit them (millions of people) in a way that will not reward moral hazard for people who overbought or purchased a mortgage they couldn't afford.
- Student Loan Forgiveness -- across the board.
There was a recent recommended diary on this site highlighting the PEW poll showing that young people are starting to drift away from the Democratic party. This would be a direct benefit to young college bound kids, current students, or recent graduates, to allow them to graduate from college debt free. Again, the mechanics of how it would work should be analyzed, but if these kids are getting direct student loans from the Gvt, the gvt has the power to forgive the loans.
This second idea may need some help from Congress, but I am not certain about that. In any case, it is a plicy proposal that must be explored.
Both of these ideas are just two off the top of my head that I think can be done, and should be done. And even if they ultimately require some Congressional approval (student loan forgiveness may have tax consequences, for example, that would require an act of congress to waive) -- it would still be worth pursuing and make the Republicans come out against refinancing millions of voters homes and forgiving the student loans of millions of young people.
I hope this diary can be a springboard to brainstorm ideas on how to help the economy and help the Democrats put forward a bold agenda that can stave off certain defeat in November.
I think if we push these and other proposals relentlessly, and make the election about whether to implement these policies or not -- the Democrats will avoid an electoral debacle. It is too late to prevent significant losses. But, it may help prevent a loss of Congress -- and chnage the narrative to the Democratic Coneback.