Policy: Budgets & Deficits

The week ahead in economics: President Obama’s jobs pivot, housing, and Detroit

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President Obama’s team announced a plan to insert the White House into an otherwise relatively calm economic news cycle this week with a speech on the economy. The Washington Examiner’s Brian Hughes reports:

President Obama this week will kick start a series of economic events, hoping to build a jobs-centered message in the wake of a series of distractions that have overshadowed his second-term agenda.

Obama will deliver an economic address on Wednesday at Knox College in Galesburg, Ill., which the White House is billing as an extension of the speech he gave there in 2005 — his first lengthy economic remarks on the national stage….

Previewing the event for reporters, White House officials said the jobs speech would touch on similar themes as a 2011 address Obama gave in Osawatomie, Kan., on income inequality.

Republicans have dismissed similar jobs pushes by the White House, framing the campaign-style events as an attempt to distract the public from slow economic gains.

Whether or not the White House is successful in its bid to draw attention to its efforts on the economy remains to be seen. Its most recent in a long string of “pivoting to jobs” was in May, with the “Middle Class Jobs and Opportunity Tour.” May’s jobs tour did not gain wide traction.

Meanwhile, both houses of Congress will continue to work on housing reform this week. Senators Tim Johnson, D-S.D., and Mike Crapo, R-Idaho, chairman and ranking member of the Senate Banking Committee, respectively, are scheduled to hold hearings on their proposed reform of the Federal Housing Administration Wednesday morning. Johnson and Crapo have said that they will follow their FHA reform measure with a broader plan to fix the still-broken housing finance market. A bipartisan group of their Banking Committee colleagues have already come to an agreement that would end the government-owned mortgage buyers Fannie Mae and Freddie Mac.

The House Financial Services Committee will meet Tuesday morning to vote on its housing finance fix, which would also phase out Fannie and Freddie but would leave a smaller role for the government in housing finance than the bipartisan Senate group’s would.

Although housing finance policy, and the fate of the two government-sponsored enterprises, remain unsettled five years after the financial crisis, neither bill is likely to go far. Sen. Mark Warner, D-Va., one of the lead sponsors of the Senate’s bipartisan bill, called the House bill an “ideologically pure exercise that will never have a single Democrat support it,” suggesting it would not pass the Democratic Senate. House Financial Services Committee Chairman Jeb Hensarling similarly dismissed the Senate bill’s chances in the House.

Last week, Rep. Mel Watt, a North Carolina Democrat and President Obama’s nominee to run the regulatory agency that oversees Fannie Mae and Freddie Mac, was approved for that post by the Senate Banking Committee on a party-line vote. Republicans, still undecided about Watt, will face a decision whether to filibuster his nomination this week, reports the Wall Street Journal. The current acting director of the Federal Housing Finance Agency, Edward DeMarco, is a George W. Bush appointee who has served throughout the collapse of the housing market and whose actions as regulator of the GSEs have been questioned by many Democrats.

This week will see continued discussion of the fate of Detroit, which filed for municipal bankruptcy on Thursday. The bankruptcy petition has not been granted by federal court. Michigan’s governor, Rick Snyder, a Republican, played down the odds that the federal government would get involved in Detroit’s situation with a bailout, as did the Mayor Dave Bing. For its part, the White House has shown no willingness to give aid to the city. Discussions about Detroit’s obligations will continue between the emergency manager and the city’s retirees and creditors throughout the bankruptcy process.

There will also be a few major economic reports this week, especially on the housing market. The National Association of Realtors will release data on existing home sales Monday morning, and the Commerce Department will report on new home sales Wednesday at 10. The reports should give an indication of the health of the housing market following a spike in mortgage rates. On Thursday morning, the Census Bureau will release a report on durable goods, a key indicator of the health of the manufacturing sector.

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