In just the latest sign of how gridlocked Washington has become, Congress is currently failing to pass even the most reliable of legislative standbys: naming post offices and federal buildings.

For each of the last several Congresses, naming post-offices has been a staple of Congress’s work. In the 109th Congress, for example, 98 of the 482 laws passed by Congress—or 1 in 5—were post-office naming bills.

But so far, the current Congress has managed to name just 17 post offices and federal buildings, plus one national refuge (the “Sam D. Hamilton Noxubee National Wildlife Refuge”).

Why the naming deficit?

While conventional wisdom holds “nothing gets done” in an election year, especially a presidential one, 2012 seems uniquely gridlocked. Lawmaking in general has slowed to a crawl—and newly named post offices are a casualty of this slowdown.

To date, Congress has passed just 106 new laws. This means that as a percentage of the overall number of bills in Congress, the share of naming bills—about 16 percent—is not that much lower than in past Congresses.

What is substantially lower is the volume of legislation being passed compared to past Congresses during a presidential election cycle. The 110th Congress, for example, passed 460 new laws in 2007-2008 (145 of which were bills to name post offices, courthouses, veterans’ hospitals and stretches of federal highway), while the 108th Congress passed 498 new laws in 2003-2004. The pace of post-office namings is like a canary in the legislative coalmine—an indicator of Congressional productivity.

To catch up with prior Congresses, the current Congress would need to pass at least 44 new laws a month through Christmas with no break for recess (including at least four new post office namings a week). Otherwise, Congress is headed toward its least productive session in the last quarter century.

To be fair, Congress has managed to pass some significant legislation in the past year, including the recently-enacted JOBS Act to ease the way for young companies to access capital. Congress also finally approved three major trade agreements with Korea, Colombia and Panama, all of which had been in the works for years.

Nevertheless, Congress is essentially at a standstill.  Fully a quarter of the laws passed this Congress have been either extensions of existing legislation or continuing appropriations bills to avoid a government shutdown.

Nor is it likely that Congress will pick up the pace of lawmaking. For one thing, Congress has punted on the big questions of budget, taxes and entitlements until after the election. Without knowing what the federal budget is going to be (or even whether there will be any federal money to spend), Congress can’t tackle such issues as the amount of money to spend on education, defense, scientific research or roads.

The other problem is the current hyper-polarization of Congress. With both sides looking to weaponize every possible step or misstep by the other side, even bipartisan legislation can’t get past the finish line for fear of giving some small political advantage to the other side.

Attention is already focusing on the expected marathon post-election lame-duck session, when Congress will allegedly solve all of the legislative problems that have been building for the past two years.

While it’s impossible to predict how successful that session will be, here’s hoping that there’s at least enough cooperation to name a few more post offices.

Photo Credit: Natalie Maynor

The 2012 Retirement Confidence Survey recently released by the Employee Benefit Research Institute (EBRI) confirms that many U.S. workers know that they are not saving enough for retirement. Two-thirds of workers say they are behind schedule in saving for retirement and only 14 percent of workers are very confident that they are saving enough.

Moderate and lower-income Americans make up a disproportionate share of the workers who are “under-saving” for retirement or not saving at all. While 93 percent of Americans with annual household income above $75,000 report having some savings for retirement, just 35 percent of households with income below $35,000 have any retirement savings. Moreover, the EBRI survey shows that higher-income households are more likely to consult with professional financial advisers, more likely to have determined how much savings they need to accumulate, and more likely to use online technologies to help manage their financial accounts.

Moderate and lower-income workers will almost always find it difficult to put much of their pay into savings because most of their income is needed to cover basic living expenses. That difficulty is why it is especially important that these workers receive guidance for managing what savings they do put away. While public policy can’t erase the savings gap between wealthy and lower-income Americans, some simple policy changes can help democratize access to the information and planning tools that Americans need to manage their savings more effectively. Perhaps the easiest of these changes is to allow the electronic delivery (“e-delivery”) of retirement planning documents as a default option over paper, while always making paper available.

Currently, the Department of Labor (DOL) defaults in favor of printing and mailing of pension documents over e-delivery. Pension plans are allowed to use e-delivery in place of mail only for those employees who use computers as an essential part of their jobs. Other workers can elect to receive electronic delivery of pension documents, but the paperwork required to opt-in to e-delivery is burdensome so only a small percentage of employed workers do so.

Without doubt, DOL’s current policy is well intended as an effort to ensure that moderate and lower-income workers who don’t have access to a computer receive the information they need. However, the impact of this policy may be the opposite of the intent. Paper is actually vastly inferior to e-delivery, and the workers who are supposed to be helped may actually miss opportunities for better managing their savings. Here’s why:

• Because of the costs of paper, printing, and postage, plan sponsors are not likely to mail more documents than required by law, such as annual statements, plan summaries, plan changes, open season deadlines. This means that there are potentially lengthy stretches of time when a worker is not being encouraged to actively engage in the management of their savings.

• With the shift to 401(k) plans and other defined contribution plans, most employees manage their own individual accounts. They decide how much of their pay to save and choose among several investment options. Participants need timely and detailed information about all of their investment options, including guidance about how much they should save and information about the potential risks and rewards of different kinds of investments. They are not going to get all of that in mailed disclosures, but those resources can easily be available online.

• E-delivery of pension documents can easily summarize the required information while providing links to detailed guidance, frequently asked questions, tools to estimate benefits at different levels of contributions, information about fees, rights, options, and much more. There is negligible additional cost to send emails to many more people or to add links to extensive supplemental information on the plan website.

• Retirement plans’ websites include interactive tools that estimate retirement benefits at different levels of contribution or with different investment options. Participants who receive retirement communications by email are much more likely to take advantage of the guidance and resources available to them. One major administrator of employer-sponsored retirement plans has reported that 87 percent of participants doubled their savings deferral rate after using the online savings planning tool, and 55 percent revised their investment allocations after using the online investment planning tool. The participants who receive communications only through the mail are less likely to access their plans’ websites and will miss out on opportunities to improve their planning for retirement.

Federal policy and employer pension plans should encourage workers to take full advantage of interactive tools to calculate their retirement needs and use the full range of information and guidance about their investment options and rights. As the EBRI study revealed, workers who do not use services to calculate their retirement needs tend to underestimate how much they should save. Moreover, only 42 percent of workers reported that they have calculated how much savings they will need for retirement. They also are prone to start retirement planning too late and will not able to make up the shortfalls toward the ends of their work careers.

Better-informed and empowered employees will be likely to save more for retirement and take more responsibility for their investment accounts. In fact, it would be irresponsible to maintain current policy that practically guarantees that large numbers of workers will not save enough for retirement and will not realize that until it is too late. At the very least, the federal regulatory policy should seek to lead as many workers as possible to the retirement planning resources that are available to them online.

And while the Department of Labor is concerned that some households do not have access to computers, laptops, smartphones, or tablets, that concern could easily be managed without shortchanging the millions of others who do have internet access and need the full range of interactive information that is available through electronic delivery. Moreover, paper will always be available as an option for those who want it.

In fact, the IRS has supplied a template for encouraging electronic communications while ensuring that anyone who wants paper documents can continue to receive them. In 2010, the IRS sent a postcard to all taxpayers who had filed paper returns for the previous year. The postcard simply stated that IRS would not be mailing paper tax forms any longer, encouraged taxpayers to file electronically, and explained that those who still wanted paper forms could print them from the IRS website, find them at libraries, post offices, and other locations, or call a toll-free number to request them. That action by the IRS saved the government millions of dollars while improving service to the public.

Other federal agencies similarly have replaced printed and mailed documents with e-mail and online resources. The Thrift Savings Plan (TSP), the 401(k) plan for federal employees, stopped mailing quarterly statements in 2003. Participants are mailed a single-page double-sided annual statement each year and are encouraged to monitor their accounts and request any changes using the TSP website.^[v]

These agencies recognized that one of the basic efficiency gains of the technological age is the elimination of the expense of printing and mailing millions and millions of documents. At much less cost, documents can be transmitted electronically or stored on a secure site where account information can be accessed, downloaded, printed, or saved. Emails and other electronic interactions can include links to layers of detailed information and guidance, far beyond what would be practical to include in mailings.

Modern technology also is individually empowering. Millions of households use online resources for banking, bill paying, buying, selling, and researching their financial and commercial options. These resources provide access to vast networks for information, communication, and interaction. It would be negligent for federal regulators to assume that certain groups of workers are permanently on the wrong side of a digital divide and should be cut off from the superior resources that are available to higher-income and white collar workers.

The Department of Labor should revise its regulations to permit pension plans to default to e-delivery while ensuring that paper documents are easily available by mail or from the employer for participants who wish to receive them. The rules also should encourage employers to ensure that their employees are aware of the full range of resources and guidance available to help them with retirement planning. If the Department of Labor is reluctant to expand e-delivery, Rep. Richard Neal has introduced H.R. 4050, the Retirement Plan Simplification and Enhancement Act, which could put this change into the hands of Congress.

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So it’s finally, incontrovertibly over.

Rick Santorum’s withdrawal from the presidential race on Tuesday saved Mitt Romney and his friends many millions of dollars and additional heartburn from charges that he’s not a “true conservative,” and gave his campaign much more time to plan the convention and the general election. Even though Romney had the nomination all but locked, and might have knocked Santorum out of the race on April 24 with a big win in Pennsylvania, Santorum had a lot of incentive to stay in the race until May, when a bunch of primaries in states with large evangelical populations were to vote. One theory holds that the cold water the RNC poured on an effort by Rick’s allies in Texas to change that state’s delegate allocation from a proportional to a winner-take-all system was the clincher, since that was the only scenario under which Santorum might have denied Romney a majority of delegates.

In any event, Mitt gets a breather, and Santorum gets to fantasize about things he might ask of a Romney campaign or administration—or perhaps of a run in 2016 if there is no Romney administration. A lot of ink is being spilled right now in assessments of Rick’s run; my own, for The New Republic, suggests he lost, ironically, because of his loyal votes for the “compassionate conservative” agenda of George W. Bush once so beloved of the Christian Right (as Mike Gerson reminded us in a Washington Post op-ed this week), which the Romney campaign used to undermine his conservative support this year.

There’s also a lot of talk about how and when Romney will get out his Etch-a-Sketch and begin pivoting to a general election message. He definitely needs a change of pace. General election polls are showing him in a much worse position against Obama than it appeared at the beginning of the primary season. One new PPP poll from North Carolina shows Romney’s approval/disapproval rate among independents in that state deteriorating from 45/36 in February of 2011 to 25/62 today.

The Obama campaign is making a serious effort to keep attention focused on the “severely conservative” positions and rhetoric the presumptive GOP candidate embraced during the nomination contest, most recently with a web video that is sort of a greatest hits collection of Romney’s recent panders to the Right. A secondary rationale for this line of attack, it is likely, is to sufficiently remind the media of Romney’s primary rhetoric that a later charge of “flip-flopping” will be easy to sustain if Mitt tries to moderate his message.

It’s unclear at this point exactly how much time and opportunity costs Romney will have to devote to an effort to placate unhappy conservatives and unite his party. On the one hand, he knows most conservative voters will eventually come around in a general election fight against Obama; that’s one important reason care should be taken in evaluating Romney’s poor overall favorability ratios, which are worsened considerably by temporary conservative dismay. On the other hand, he can do without the distraction of intraparty sniping, and would undoubtedly like to tamp it down before it threatens to loosen his control over such future assets as his vice presidential selection and his convention and stretch-run messages.

Meanwhile, Romney and his party continue to struggle a bit in trying to develop a consistent message about the economy. The latest monthly jobs report was very disappointing to the White House, but was not dramatically negative enough to support a relapse in the GOP message from one accusing Obama of inhibiting the recovery to one attacking him for outright failure. Romney did pull off one imaginative (if too transparent to stick) ploy in using a highly selective statistic of job losses by women from January 2009 until now to suggest Obama is waging his own, economic “war on women.” But you get the sense Republicans are awaiting more definitive information on economic trends between now and November before settling on an economic message.

Obama continues to get generally good news from the polls. One thing he does not have to worry much about is placating his party base. According to Gallup, Obama’s job approval rating among “liberal Democrats” currently stands at 87%. Nor does he have a party unity problem: his present job approval rating among “moderate Democrats” is at 75%, and among “conservative Democrats” is at 73%. Romney can only gaze enviously at these numbers.

Photo Credit: Robert Huffstutter

Tuesday’s primaries in Wisconsin, Maryland and D.C. were a clean sweep for Mitt Romney, who also won 86 of the 95 pledged delegates at stake in the three states.

According to everybody’s estimates (other than those of the Santorum campaign), Romney is now well over half-way to the goal of the 1144 delegates needed to win the GOP nomination.  An especially credible estimate made by Ryan Lizza, Josh Putnam and Andrew Prokop for The New Yorker even before Tuesday’s votes were counted showed Romney as certain to get very close to the magic number at the end of the contested primaries, needing only a tiny sliver of the unpledged delegates to get over the top. At worst, Mitt’s in the situation Barack Obama faced late in the 2008 Democratic contest, when the only scenario that could have prevented his nomination was an unlikely and almost unanimous revolt among unpledged super-delegates. But any such comparison suggests that Rick Santorum could have Hillary Clinton’s staying power and ability to win heavily in late primaries, and that’s more than a stretch.

From a more practical perspective, the question going into the April 2 primaries was whether Santorum could somehow survive until May, when a string of southern and midwestern primaries could provide him with the sort of demographic landscape in which he has done well so far. But even if that happens, the June calendar represents a Romney firewall of delegate-rich primaries in New Jersey, California and Utah that now look likely to officially put the front-runner over the top–that is, even if Santorum fights on to the bitter end.

More immediately, speculation is centering on the April 24 primary in Santorum’s home state of Pennsylvania. The trajectory in polling of the state is very similar to what we saw in Wisconsin, with a steady Santorum lead beginning to evaporate as Romney trotted out conservative opinion-leader endorsements and dominated paid advertising. Today PPP published the first survey showing Romney actually pulling into the lead in Pennsylvania, with a 42/37 lead, but the trend lines are reasonably clear. The question is whether the hiatus in primaries between now and April 24 gives Santorum the opportunity to play off expectations and score an “upset” by winning his own state, or just adds to the factors pointing to a crushing Romney win there (which, in conjunction with sure victories the same day in New York, Connecticut and Rhode Island, would make the pressure on Santorum to fold his campaign before the oasis of May primaries very intense).

But although Romney’s fortunes in the candidate race look very bright, the Wisconsin results showed he still has significant work to do in winning the affections of conservative voters.  According to the exit polls, he still lost evangelicals, regular church-goers, and rural voters in Wisconsin, though he did run even with Santorum among “very conservative” voters.  More interesting, 23% of Wisconsin primary voters deemed Santorum “not conservative enough,” which showed the success of Team Romney in raising doubts about Santorum’s record in Congress, but doesn’t indicate more than strictly relative satisfaction with Mitt himself (whom 44% of Wisconsin voters described as “not conservative enough”). To some extent, you could say that some “movement conservatives” are keeping pressure on Mitt to move right and stay right by voting for or otherwise encouraging Santorum, while others accomplish the same purpose by joining his camp. Either way, for all the talk of Romney’s impending or already-underway “pivot” to a general election strategy and message, it will be a while before he can safely ignore his right flank, and the Etch-a-Sketch gaffe will ensure any such pivot gets a lot of unfriendly attention.

Within this broader context, Romney’s suddenly strong identification with Rep. Paul Ryan and his controversial budget proposal makes more sense than it might otherwise. Ryan was a tangible asset for Romney in Wisconsin; is very popular among conservative opinion-leaders; and provides the putative nominee a way, however risky it might be, to compare himself favorably with the president in terms of the specificity of his fiscal policies. Indeed, as was demonstrated by the back-to-back Obama and Romney appearances before the Association of Newspaper Editors in Washington this week, both candidates are promoting the Ryan budget as a valid indicator of the choices the electorate will face in November. You could even make the argument that movement conservatives have indeed succeeded in their longstanding effort to nominate a “conservative alternative to Mitt Romney”—in the latest version of Mitt Romney.

Photo Credit: DaveLawrence8

The late economist Mancur Olson would have been a fan of Jonathan Ames. Ames is the creator of the HBO series Bored to Death as well as the eponymous protagonist, an aspiring novelist who moonlights as a private investigator. Olson may have enjoyed the ensuing hijinks, but he would have seen a larger economic lesson in the show.

In his classic book, The Logic of Collective Action, Olson demonstrated that small groups are usually more efficient and effective at achieving collective ends than large groups. Despite the narrower interests they represent, small groups find it easier to engage in coordinated behavior and achieve group ends, even when those ends may work against the interests of the larger society. Today, this “logic of collective action” can be seen in the spread of professional and occupational licensing. Whereas in the 1950s only five percent of the American workforce was subject to such licensing, it currently stands at nearly one-third. What this means is that, to enter certain professions and occupations, individuals must attain minimum levels of education and training and, often, pass exams to demonstrate their competency to practice.

Many worry that this growth, while salutary to a point, has now become a structural rigidity and a drag on economic vitality. Ames’ character, who readily admits to customers that he is an unlicensed private investigator, might be seen by Olson as indicative of precisely the type of enterprising spirit that America needs right now.

As it happens, private investigators must be licensed in most states. Licensure may appear reasonable for many professions, such as social workers and marriage and family therapists. For others, strict requirements may appear marginal: barbers, nail technicians, interior designers, real estate agents, landscape architects, and so on.

Meanwhile, it is easy to ridicule some licensing requirements. In Kansas, dry cleaners must obtain professional licenses. Don’t even think about promoting a boxing event in Virginia without a state-mandated license. California and Florida protect an unwary public from unlicensed yacht brokers, while in many states those who operate cemeteries must be licensed. Athlete agents must be licensed in Georgia and, in Maryland, locksmiths, pawnbrokers, and secondhand precious metal dealers must be licensed. Some cities add another layer of requirements: New York City and the District of Columbia put prospective sightseeing guides through examination and licensing processes. Naturally, the schools and teachers that train the next generation in these occupations must also be licensed.

To some, the spread of licensing embodies regulation run amok. Yet Olson would be quick to point out that, in most cases, state licensing is sought by the occupations themselves. Licensing restrictions and the barriers to entry they erect have the effect of lessening competition for those who are licensed to practice. Who wouldn’t seek protection from new entry, competition, and innovation that might threaten your livelihood?

Protection from competition, of course, is not the only reason that licensing restrictions exist. It might be easy to poke fun at some of the above occupations for which licensing is required; it is less easy when it comes to things like dentistry, medical services, and legal practice. But who would willingly submit to an unlicensed surgeon or dentist? The growth of occupational licensing as a labor market institution, moreover, has two sources. One is the absolute growth in the number of occupations subject to state-sanctioned licensing, which has been far from uniform. In some states, nearly 200 occupations require licenses, while in others the number is around 50.

The second source of growth is rather benign: there has simply been greater employment growth in many of the occupations that were already subject to licensing. Natural employment trends have thus driven rising shares of licensed professionals, particularly in fields such as medicine, education, legal services, and accounting.

Such growth has not come without benefits. Licensing enhances quality by excluding poorly skilled providers, induces greater levels of human capital investment, and reduces risk for consumers by providing a guarantee of minimum levels of training and skills. The United States stacks up well internationally: according to the Organisation for Economic Cooperation and Development (OECD), the U.S. is one of the least restrictive countries in terms of entry and conduct regulation for accounting, engineering, architecture, and the legal profession.

Nonetheless, evidence supporting the benefits of licensing is shaky. While consumers may benefit from greater information, they pay for it in the form of higher prices, which means faster wage growth in licensed occupations. Higher prices would be justifiable, of course, if they paid for higher quality. But, researchers have found little evidence that licensing barriers enhance quality, including no reduction in complaints to state licensing boards when comparing different occupations in different states.

Importantly, occupational licensing is an issue around which liberals and conservatives can find common ground. As Kleiner points out, for the left, it is a matter of social justice: rising occupational licensing, especially in certain professions, worsens wage inequality while the higher prices fall most harshly on low-income consumers. For those on the right, it presents an issue of economic liberty because barriers to entry are artificially raised and competition is muted.

Indeed, there is mounting evidence that professional and occupational licensing is blocking innovation and entrepreneurship across large swathes of the American economy. Some state officials, such as the secretary of state in Georgia, have proposed consolidating oversight of professional licensing to reduce frictions and costs. In February, the Treasury and Defense Departments issued a joint report highlighting the negative impact of licensing on the economic prospects of military families.

Specifically, the report notes that the dual impact of licensing requirements and the high migration rate of military families means that “the lack of license portability—the ability to transfer an existing license to a new state with minimal application requirements”—imposes significant burdens on the well-being of military families. The report recommends conditional endorsement of licenses from other states, temporary or provisional licenses, and faster application processes. A handful of states, working with the Pentagon, have made regulatory and legislative changes to ease the restrictions for military spouses.

What else can be done? In a recent report, License to Grow, the Kauffman Foundation, working with law professors and economists, recommends a “driver’s license” approach, which means mutual recognition across states. This would not require federal preemption, but simply a law mandating that states recognize occupational licenses granted by other states. Right now, a professional moving from one state to another often needs to run a new gauntlet of forms and exams—states will be understandably reluctant to relinquish this revenue stream. In instances in which someone moves from a state where their occupation is not licensed to one where it is licensed, proposals such as those put forth in the Treasury and Defense report—temporary licenses, expedited applications—would be needed.

Another option, promoted by Kleiner, is certification, wherein “any person can perform the relevant tasks, but the government or generally another nonprofit agency administers an examination and certifies those who have passed, as well as identifies the level of skill and knowledge for certification.” For Kleiner, certification (which is already a large form of regulation) would preserve the incentive for human capital investment, but allow consumers greater choice in selecting services and responding to price increases. This shifts some risk to consumers, but does not require that they sort things out for themselves—they remain free to choose certified providers.

The hardest profession to crack is the law. The standard complaint is that the United States has far too many lawyers, yet the high cost of legal services belies this. The practice of law is restricted in two ways: first, anyone offering legal services must have completed a three-year education at an accredited law school. (Accreditation, in this case by the American Bar Association, is an issue that deserves its own treatment because it is an issue in all of higher education.) Second, legal services can only be provided by a business that is owned by attorneys. Business model innovation is generally not encouraged in the legal profession.

The effect is twofold. First, as in other licensed occupations, these barriers constrict the supply of who can provide what legal services. An alternative model might be found in medicine, where room has steadily opened for nurse practitioners and physician assistants to practice alongside physicians. Paralegals perform a wide array of work within firms, but the law is far behind medicine in this respect (and medicine itself still has ample room for progress— most states restrict the scope of nurse practitioners). There are obviously many areas in which costly legal counsel will still be required, but in routine tasks such as contracts and wills, lower barriers to practice are justified.

Second, restricted competition in the practice of law has wide ripple effects across the economy. In particular, entrepreneurs across a wide array of sectors face high costs for services that could be rapidly commoditized or opened to greater competition. Opening up the legal profession to different business models may offer one solution.

Britain, in fact, has already taken this step, recently changing the law to allow “alternative business structures” in the ownership models of law firms and what types of firms can offer legal services. This will permit new entrants— a software outsourcing company has said it will pursue the acquisition of a law firm—and the raising of outside capital by law firms. Such reform has so far gone nowhere in the United States—one law firm is suing three states for the ability to raise external money, and the American Bar Association has unsuccessfully attempted on more than one occasion to raise the idea of alternative business models. But, if the experiment in Britain succeeds in lowering costs and introducing innovations into the legal profession—with beneficial results throughout the economy—it will be difficult to thwart such reform in the United States.

Nobody argues that, to spur innovation and economic growth, the United States should abandon measures that protect consumers and maintain at least a minimum level of quality service. But there is a point past which the protective costs of occupational licensing outweigh the benefits by hindering new entry, which is the fundamental source of economic growth. The lesson of Mancur Olson and Jonathan Ames is not that we are at the mercy of occupational interest groups or that consumers, at some risk, must find their way through trial and error. It is that there remains considerable room for experimentation, retaining adequate safeguards for quality while promoting innovation and lower costs. At a time of persistent unemployment and concerns over economic vitality, the United States can ill afford to keep these guild-like structures.

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In the last six months, President Obama has rolled out a series of proposals to address America’s still ailing housing markets. Elevating housing on the White House priority list is a welcome if belated development—one PPI called for in a major conference on new housing solutions we cosponsored last fall.

To assess the administration’s new proposals, we should start by clearly defining the central problem that must be solved. Contrary to media accounts, it’s not foreclosures, abandoned homes or underwater borrowers. These are all symptoms of a deeper malady: declining home prices. So the question we should ask is whether the President’s new flurry of ideas will move the needle on prices.

The answer is: some but probably not enough. For starters, they don’t do enough to help homeowners dig out from an avalanche of negative equity. For another, there’s no prescription here for stimulating more demand for housing. Nonetheless, the administration’s new proposals would ease some of the strain on distressed homeowners, and they deserve support.

Here’s a rundown of the President’s five proposals:

1. The $25 billion foreclosure-abuse settlement reached with banks in February.

Last month, the administration brokered a landmark settlement between the largest mortgage providers and a coalition of states’ Attorney Generals. This is a huge election year win for Obama. The settlement will provide some restitution to about 750,000 homeowners who were “robo-signed” into foreclosure and who will receive $2,000 each to ease the pain. Another one million homeowners will get a chance for the principal on their loans to be reduced.

While the numbers involved are too small to move stricken housing markets, the settlement will probably prevent some unnecessary foreclosures. On the other side, the banks have paid up and put this episode behind them, which we hope will shift their focus back to much needed lending.

2. Broader Refinancing Opportunities.

Obama issued an order to cut refinancing fees for any loan insured by the Federal Housing Administration, and The Federal Housing Finance Agency (FHFA) announced a set of changes to help a greater number of creditworthy borrowers refinance – particularly those who are underwater on their mortgages.

In a move that not only keeps more families in their homes, but stimulates the economy as well, the administration pushed to allow more homeowners greater access to historically low rates by expanding refinancing opportunities. These historic low rates have been aided by an extremely accommodating monetary policy by the Federal Reserve. This has not only led to low rates on home mortgages, but lower costs on automobile financing, which has spurred record growth of American automobile production, lowered the costs of business investment and generated billions of dollars in consumer credit to further grease the economy. Having flooded the market with liquidity, it would be foolish not to allow as many homeowners as possible to refinance.

The administration’s initial housing initiatives of HAMP and HARP were widely panned as helping far fewer people than the administration promised. Nonetheless, it’s encouraging that some of the largest banks, like Citi, Chase, Wells Fargo, and Ally, are increasing their mortgage lending and participation in these programs, which will broaden their ultimate impact. The only major player in the mortgage market to lag significantly behind was Bank of America.

3. A review of military foreclosures.

Over the past year, reports surfaced about egregious payment collection and foreclosure practices by banks and servicers on loans to military families. With some troops seeing third, fourth and fifth tours of duty in the Middle East, their families struggled during the recession to hold onto their homes. President Obama has unveiled a new agreement with banks to review foreclosures for members of the military from 2006 on. Any veteran whose home has been wrongly foreclosed on since then will receive compensation equal to a minimum of $116,785 plus any home equity lost since the foreclosure.

While the administration is right to champion families of U.S. servicemen and women, the number of households that will be affected is small and this proposal won’t have a big impact on housing markets.

4. A Homeowner Bill of Rights, a streamlined refinancing process and a transition to more rental properties.

The administration proposes to offer refinancing opportunities to homeowners whose mortgages are not owned by Fannie Mae or Freddie Mac, and therefore are not eligible to participate in HAMP and HARP. That seems fair, but it would shift these privately-held loans onto the government’s books, since they’d be using the Federal Housing Authority (FHA) guarantee. This would increase the public’s exposure to foreclosure risk, when what we really need is to bring private capital back into the private marketplace. As an interim measure, however, this idea makes sense.

The “Homeowners Bill of Rights” aims at protecting distressed homeowners from robo-signing and other abusive practices. It’s a reaction to the Mortgage Electronic Registration System (MERS) disaster, where the private clearinghouse mortgage paperwork failed to adequately track loans, precipitating the robo-signing  epidemic.

These requirements may be burdensome to some of the largest banks and mortgage lenders. But as long as these corporations control such a large share of the market, that’s a price they’ll have to pay to restore stability and trust.

Much less convincing is the administration’s proposal to convert distressed homes to rental properties. An increase in renters may help as a “spot” solution in places where there is an investor- friendly market (think university communities). Certainly, in small doses a narrow and targeted release of quality turnkey investment opportunities could prove useful. But dumping rental properties in bulk would mean flooding some markets with inventory that will only eventually be sold at discounted prices.

This, in turn, would put additional downward pressure onto already depressed markets like Las Vegas, and continue to prevent current homeowners from selling and new homebuyers from entering the market. Furthermore, if conversion to rental becomes too widespread, you’ll eventually see pushback from local communities that do not want to diminish homeownership rates (and property tax collections) in their communities.

5. Mortgage forbearance for jobless buyers.

The Obama administration wants to extend the forbearance period that unemployed borrowers could receive on their mortgages to 12 months, up from four. (It’s only three months in HAMP). This would grant homeowners who lose their jobs a longer grace period for not paying the monthly mortgage. Getting more workers back into full-time work and paying their mortgage is a win-win for the U.S. economy.

While the upcoming elections will likely make any bolder actions impossible, these proposals are still a significant step in the right direction.

Photo Credit: Jekemp

On one level, Rick Santorum’s campaign got a desperately needed boost from his win in Louisiana’s primary last Saturday. But all the other signs about the campaign indicate a party ready to end the primary season.

Santorum got his ideal electorate in Louisiana, a low-turnout affair in which half the voters were self-identified “very conservative” voters, and half called themselves “strong supporters” of the Tea Party movement.  Two-thirds say they attend worship services weekly or more.

Just as importantly, Newt Gingrich, who was running very well in Louisiana polls not that long ago, saw his support-levels shrink along with his campaign budget.

So Santorum won easily, and even won among Catholic voters for the first time in this cycle.  Romney did carry urban areas, as usual.  And more importantly, Louisiana’s delegate selection rules limited Santorum’s primary-night haul significantly, since only 20 of the state’s 46 delegates were at stake.

But on Thursday, two days before Louisiana Republicans went to the polls, Santorum was sent a very ominous signal by Sen. Jim DeMint, who is the closest thing around to an acknowledged leader of “movement conservatives” in the GOP:

“I can tell conservatives from my perspective is that, I’m not only comfortable with Romney, I’m excited about the possibility of him possibly being our nominee,” DeMint said. “Again, this is not a formal endorsement and I do not intend to do that right now but I just think we just need to look at where we are….”

“I think we all need to look at this presidential primary and encourage the candidates to do a little self-reflection here—what’s good for our country,” said DeMint. “The sooner we can make a decision, I think the sooner we can focus on the real problem which is Obama.”

It’s hard to say when this kind of high sign will trickle down to the grassroots conservative activists who are keeping Santorum’s campaign alive. For that matter, Newt Gingrich won’t go away, either, though his Super-PAC sugar daddy Sheldon Adelson has said Newt’s “at the end of his line,” and he’s reduced to calling for bizarre convention scenarios since he doesn’t have the resources to win delegates.

According to CNN’s estimates, Romney now has 569 delegates (almost exactly half the 1144 needed for final victory) while his opponents have a combined 469. The calendar now shifts to an April calendar heavily favoring the front-runner, with the exception of two states—Wisconsin and Pennsylvania—where Santorum has been the favorite. But two new polls in Wisconsin show Romney moving into a solid lead there, while another shows him even with Santorum in his home state of Pennsylvania. Since Wisconsin is next on the calendar, next Tuesday, a big Romney win could definitely raise new calls for Santorum to pack it in.

Still another problem for Santorum is that the presidential nominating race is now drawing significantly less media attention, reducing his opportunities for earned coverage. At least one veteran political reporter, Walter Shapiro, is arguing that the chattering classes have rushed to judgment before Romney has actually won the nomination, effectively disenfranchising future GOP primary voters (I’ve done a partial rebuttal here).

A more obvious challenge for Santorum is the massive media attention currently being paid to non-campaign events, particularly the Supreme Court’s consideration of constitutional challenges to the Affordable Care and Patient Protection Act. Since the oral arguments before the Court have shaken earlier assumptions that ObamaCare would comfortably survive the challenge, the (roughly) three months that will elapse before we can expect a decision will make speculation on the subject a continuing subject of major media attention.

A closely related issue is whether an adverse Court decision could significantly affect the presidential general election. That’s not easy to answer. You could argue that this development would ease some conservative fears that Mitt Romney as president might not act quickly or definitively to repeal ObamaCare. But on the other hand, such an action would also draw fresh attention to the “Replace” part of the GOP “Repeal-and-Replace” agenda for health care, which might particularly call into question the willingness and ability of Republicans to implement such popular reforms as a ban on insurance company rate and access discrimination against people with preexisting conditions.

More generally, there are signs that a combination of dynamics are taking a toll on putative nominee Mitt Romney’s general election standing. A new ABC/WaPo poll this week showed his favorable/unfavorable ratios deteriorating to unprecedented levels, particularly among independents and self-identified moderates. The crux is that Romney has every reason to want a quick liquidation of the nomination contest—that is, before his numbers sink along with the rest of the Republican field.

Photo Credit: Cabbit