Just when things start looking good for the Democrats and the Obama administration, the President and his Wall Street finance advisors decide that its time to hand back control to the same private lenders who decimated the mortgage market, leading to a government bailout and the worse economic downturn since the Great Depression.
In the House, the hard-core conservatives are driving the mainstream Republican majority crazy with their ill-advised suggestions for cuts in government. The Republican campaign promise to cut $1 billion in "waste" from government programs came up a bit short – about $74 billion short.
Canter and the Tea Partiers have proposed more, but the cuts are of dubious value and come from areas that have mainstream Republicans panicking.
Health Care (e.g., health insurance) reform seems safe and has been determined to save money, not increase spending. Of course, Bush-appointed judges are issuing rulings that mandating health insurance is unconstitutional. The judges are forgetting about the compelling state interest argument that may or may not sway the Supreme Court, but will be a moment almost as defining as the Bush appointment … I mean ruling … that put G.W. in the White House in 2000 when the matter goes before them -- probably in 2012.
The economy is waking, due in large part to ARRA and other government job-creating programs. Middle class Americans are actually buying homes again.
So, since things are going well, I suppose Obama became bored after the fall of Mubarak to a popular democratic uprising and decided to cause more trouble for himself.
Either that, or the finance team (sans Sperling) that owes it's careers to Wall Street and now advise the President, convinced him that free-market enterprise and Milton Freedman-type economics was worth another try. Heck, its only been attempted and failed three other times in recent memory.
On Friday, the Obama administration outlined its plan to phase out government support of the U.S. housing finance system -- and wind down Fannie Mae and Freddie Mac.
The plan - a 180-degree change of course following a decades-long campaign to extend homeownership to more Americans - would shift more of the burden to the private sector. Underwriting standards for home loans will tighten. Borrowers will face higher rates and fees as well as bigger down payments.
It was a Marie Antoinette moment – “let them live in rentals!”
These steps will dial back government support too dramatically, make mortgages more expensive, and will extend the housing decline and lock buyers out of the market at a point where things were just beginning to look a little bit better for the first time during the Obama presidency.
The President and his people seem intent on assuring he is a one-termer.
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