<br>Gotham Notes...

Saturday, March 27, 2004

Bush's Home on the Range (Stovetop, That Is...)

From Friday's Inside Politics on CNN:

[BASH:] Now, these two Southwest stops in state-of-play states are not billed as campaign appearances, but rather as official White House events. So they will be paid for by the taxpayers. Dana Bash, CNN, Albuquerque, New Mexico.
(END VIDEOTAPE)

WOODRUFF: Quickly now to some breaking news coming to us from Raleigh-Durham Airport in North Carolina, the triangle area. These are live pictures coming in of a military fighter jet that has crashed there in the vicinity of the Raleigh-Durham Airport.

Paid for by the taxpayers?!

I want my money back!

Thanks to Dana Bash for at least making the attempt to slide this item into her report.

Of course, this tasty political morsel just went flying right by the trained ears of Judy Woodruff.

It's bad enough that the President of the United States stands accused of the senseless slaughter of almost 600 American soldiers and thousands of Iraqi citizens on a whim. And standing idly by while the murder of 3,000 innocents who went to work one day in our fair city was being planned. But now for the Fundraiser-in-Chief to be accused of being a petty thief as well is more than this country can bear.

But, there's more to this "working rally" (wink, wink, nudge, nudge) trip to the Southwest.

George W. Bush would have his audience believe he's for "the little guy" homeowner.

OK, fair enough, he's got so little to run on, and they've just taken his "War Paint President" theme away from him, let him have what little he's got left.

More from the IP report:

[BASH:] Now, Democrats are making job loss on the president's watch a top issue this election year. But here in New Mexico and in Arizona, job loss has not been as devastating, as in most states. So the president is going to say what he says many times as he travels the country, that the economy is doing much better than people realize, and he will give an example in both of these stops by talking about the rise in homeownership.

BUSH: "The home sales were the highest ever recently. That's exciting news for the country when you think about it. It's good for the builders. But more importantly, it's good for the owners.

We want people owning something in America. That's what we want. The great dream about America is 'I can own my own home,' people say."

BASH: Few states are likely to see a tighter contest on November 2nd than here in New Mexico. It was the closest vote in 2000, even closer than in Florida. Al Gore won by just 366 votes. And polls today show Senator Kerry and President Bush in a virtual dead heat.

Let's look at this more closely, though. Especially this quote:

by talking about the rise in homeownership.

BUSH: The home sales were the highest ever recently. That's exciting news for the country when you think about it. It's good for the builders. But more importantly, it's good for the owners.

What's behind that rise, exactly? Why has the percentage of Americans owning homes jumped to the high 60%s from the mid-40%s?

Was it that $300 tax refund they got that put them over the ownership edge? Or that extra $20 in their checks from the rate drop?

Not likely.

How about a 1.0% interest rate making mortgages lower than at anytime in most Americans' lifetimes?

That's more like it.

How about a housing bubble that's shooting prices up so high so fast while these rates are so low, that anyone who wants a house would be a fool to wait and just let prices go even higher?

Bingo.

Q.: Why are interest rates 1.0%? A.: Because the economy is a mess and this administration has no other ideas besides this and more tax cuts.

Oh.

Q.: Why is there a housing bubble? A.: Because the economy is a mess, and nothing else currently has any value.

Oh.

Now, for the Dark Side.

Economists and financial types have been saying for months on end that people have been seduced into buying way more house than they can afford. At some juncture, this worldwide housing bubble (what? You thought it was just us?) will begin making a very loud popping sound, maybe over in Great Britain or in Brazil, perhaps, and set off the domino effect that will seriously cripple dozens of world economies, including our own.

In practical terms, this means the federal government will be in no position to help you out when the dam breaks, as it scurries to right its own ship. So, when the "pop" comes, the price of your house will plummet, making it nearly impossible to sell without taking a beating—just as a recession forces interest rates back up, making it harder for potential buyers and precluding your ability to pay for the—surprise! variable—mortgage on your home. This will be especially true when you become laid off in the ensuing recession.

Those who had been in a good housing situation face jepoardy as well. Millions of dollars of core equity has been sucked out of the homes of Middle Class America. For way too many of these folks, the money is spent and gone. All that remains to help face any economic upheavals are the reduced equity in your home and the payments of a new lien on your house. Not to mention that much of that newly refinanced debt is on variable terms as well.

We are looking at a wave of foreclosures, bankruptcies and repossessions that is unprecedented in our history.

But, George comes to the rescue! He'll figure it all out.

Well, maybe not.

Kim Schaffer of the National Low Income Housing Coalition points out that there are reasons to be nervous about Bush's initiatives concerning housing.

Here's the Bush Housing Record:

AMERICAN DREAM DOWNPAYMENT INITIATIVE: Only a Fraction of the Funding

The American Dream Downpayment Act is the cornerstone of the Bush Administration's housing policy, and the Administration says the initiative will provide $200 million a year in downpayment assistance to help 40,000 families. While it's true that President Bush requested $200 million for this program in 2004, Congress allocated only $162.5 million in 2003 and 2004 combined, and this is the amount that will be available to families. If the Act were truly a priority for the President, he could have weighed in with Congress and pushed for full funding each year.

What it means: Only an estimated 32,400 families, not the 40,000 families the President claims, will benefit from the American Dream program. And even that number is based on the assumption that each family would receive only a very modest $5,000 in assistance. According to HUD's data and assuming $5,000 in assistance to each family, just 529 families in Arizona and 180 families in New Mexico can expect to benefit from this initiative. (http://www.hud.gov/offices/cpd/about/budget/budget04/index.cfm)

ZERO DOWNPAYMENT INITIATIVE: A Modest Proposal

The President has proposed a new zero downpayment homeownership insurance product as part of his 2005 budget. The proposal allows first-time homebuyers to obtain an FHA-insured loan with no downpayment, as opposed to the 3% down currently required. The President's proposal calls for higher monthly premiums for families who take advantage of the new product.

What it means: The Initiative is expected to help 150,000 families a year move into homeownership. It appears that what families will save in downpayment costs, they will make up for in increased premiums over the life of their mortgage. The premiums are expected to generate $184 million in revenues that will be used to reduce the deficit, created in large measure by tax cuts for wealthy elites. [Ed. - This is basically the same scam used by auto makers and car dealers to entice folks to loosen their tight grips on their hard-earned cash. These guys are resourceful, indeed.]

HOUSING VOUCHER PROGRAM: Gutting the Linchpin of Federal Housing Policy

A person with a voucher pays 30% of his or her income towards rent on a modest apartment, and the voucher makes up the difference. The housing voucher program helps 2 million families make up the difference between what housing costs and what they can afford to pay. Millions of additional families can't afford housing and are on waiting lists for vouchers.

Instead of working to address the unmet need in his 2005 budget, the President proposes to cut voucher funding drastically. He has proposed $1.1 billion for the voucher program below 2004 levels, and $1.6 billion below what is actually needed to account for inflation—a 12% cut. He would also cut funding more each year for the next five years, for a total cut of 30% by 2009. (Significantly, HUD does not dispute these numbers.)

President Bush goes even further, proposing to remove important resident protections. Among other changes, local housing authorities would no longer be required to serve people with the lowest incomes, and they would not be required to keep rent at 30% of a resident's income. Indeed, given funding cuts, housing authorities would likely be forced to raise rents and serve higher income people.

What it means: 250,000 families in 2005 and as many as 600,000 families by 2009 could lose their affordable housing if President Bush's proposal is enacted. (See http://www.cbpp.org/housingvoucher.htm).

HOPE VI: Zeroing out Public Housing Dollars

Until last year, HOPE VI provided about $574 million a year to demolish or renovate severely distressed public housing. Despite a $20 billion backlog in public housing maintenance costs, President Bush proposes zeroing the HOPE VI program in 2005.

What it means: Public housing is an important part of the nation's affordable housing stock. A loss of $574 million a year in public housing funding means that many of the 1.2 millions families of public housing will continue to live in substandard and intolerable conditions.

NATIONAL HOUSING TRUST FUND: Ignoring Rental and Homeownership Solutions

A National Housing Trust Fund would provide funds to build, rehabilitate and preserve 1.5 million affordable homes over the next decade. 75% of funds would provide rental housing, and 25% would provide homeownership opportunities. The funds would primarily be targeted to families with the lowest incomes.

There is significant support for a National Housing Trust Fund: More than 4,950 organizations and local leaders have endorsed the National Housing Trust Fund Campaign (). Legislation in the House of Representatives is sponsored by 211 Members, and Senator John Kerry (D-MA) is the lead sponsor of a National Housing Trust Fund bill in the Senate.

Despite the fact that a National Housing Trust Fund would help alleviate both rental and homeownership problems, President Bush has not included a Trust Fund proposal in his budget plans. Further, top Administration officials have spoken out against a Trust Fund, with former HUD Secretary Mel Martinez once saying that a National Housing Trust Fund is not needed because housing is a state and local issue.

What it means: President Bush could, but has chosen not to, work to establish a National Housing Trust Fund that would help 1.5 million families access affordable housing. His failure to do so robs families of both rental and homeownership opportunities.

OK, so maybe George doesn't have increased home ownership as a feather in his cap to run on after all.

Damn, what CAN we find for ol' Shrub to run on?

Oh! I know!

The Right of Kings!

posted by Gotham 12:21 PM

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Gotham Notes...

Saturday, March 27, 2004

Bush's Home on the Range (Stovetop, That Is...)

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