Rising Unemployment: No Laughing Matter
Add another first to Barack Obama's record: he is the first U.S. president to make a personal appeal to the International Olympic Committee - and the first to be rejected. This flight of fancy occurred the day the Labor Department announced the highest unemployment rate in 26 years (9.8%.)
A tragically flawed portrait of a naive, un-ready president is coming into view. Due to his immense popularity with the news media and American people, he has falsely come to believe all he has to do is show up, engage in his charm offensive with eloquent words and he'll get what he wants. The most urgent question raised by the failed Olympic bid was well phrased by Rep. Pete Hoeskstra, (R-MI) to the Wall Street Journal. "For this president, everything is a priority." If everything is a priority, nothing is a priority.
To date 60% of the president's $787 billion stimulus remains unspent. Where are the jobs? 15 million people are unemployed. Employers shed another 263,000 jobs in September pushing the unemployment rate to 9.8%, more than the 9% ceiling the administration swore unemployment wouldn't exceed with passage of the stimulus.
Cash for clunkers, which was part of the stimulus, also crashed short of its goals. The $3 billion program was intended to boost American car sales and help resuscitate a dying GM and Chrysler. During the summer, roughly 700,000 cars were sold to buyers who received $4500 to purchase a new car and most buyers traded in clunkers for more fuel efficient foreign cars (Toyotas and Hondas). In September, car sales at GM plunged 45% from a year earlier and at Chrysler sank 42%. This program didn't stimulate much but rather cannibalized future car sales from people who critics predicted would have probably purchased new cars anyway.
Another Obama initiative which has produced underwhelming results is the administration foreclosure prevention plan. In July, Senate Banking Committee Chairman Chris Dodd called the $75 billion foreclosure prevention program "disgraceful" because few borrowers received loan modifications to help stabilize the country's collapsed housing market. In February, the administration boasted 4 million borrowers would get the help they needed to keep their homes. According to a September Treasury report, a meager 12% of eligible borrowers, 360,000, had begun loan modifications.
Despite the $700 billion in government funds banks have received, they've been stingy in consumer lending, particularly home loans. Wells Fargo has only initiated modifications to 11% of borrowers while Bank of America a mere 7% and besides the lack of foreclosure modifications, banks are also hoarding cash from well heeled, credit worthy borrowers seeking to refinance their home loans.
People shopping for or looking to refinance a jumbo loan exceeding $729,750 are generally out of luck. Banks argue there's no secondary market for jumbos now so they have to keep the loans on their books. It is an inane policy for banks to impose more stringent standards on borrowers with good incomes and credit and eagerly offer lower rates and modifications to borrowers with uncertain income and shaky credit. This hefty down-payment requirement of 20%-40% on jumbo loans (depending on the amount) is another reason the housing market continues to languish.
The housing stabilization/foreclosure prevention program also missed the mark. It should have given incentives to banks to get borrowers out of home loans they should never have gotten in the first place. Studies have found most borrowers who receive modifications, default again on their loans within three to six months. Some of that $75 billion would have been better spent pushing the banks to refinance loans of borrowers who have an ability to pay their loans. After refinancing their home loans to lower rates, these borrowers would have some extra money to spend in their local economies. Putting a band aid on a gushing wound only leads to a festering mess later not a recovery.
Meanwhile, the president remains hell bent on force feeding Americans a $1 trillion healthcare bill against ever-increasing resistance.
When he flew to Copenhagen to sprinkle his signature razzle, dazzle pixie dust charm on the International Olympic Committee, Obama grossly over-estimated the power of his celebrity and diminished his credibility as President of the United States. Instead of jetting off to Copenhagen, appearing on the Late Show with David Letterman or conducting endless rounds of interviews and speeches on healthcare reform, the president should descend from the clouds of his
own popularity into the thick weeds of reality. It's time for the president to settle into his job, go for gold here at home and abandon the role of salesman and celebrity in chief. Borrowing from his words: "the time is now and we can't afford to wait any longer."