House Financial Services Committee chair Rep. Barney Frank -- profiled in the New York Times this week -- is the only person in Washington remotely both as bright and as indecipherable as Alan Greenspan. His accent is the aural equivalent of illegible handwriting. A stenographer should follow him around so you don't have to wait 'til the next day for the transcript.

Mr. Frank, who has deftly led the surprisingly challenging effort to pass comprehensive housing legislation equal to the crisis, made an off-handed remark, according to the Times profile, after the House approved his bill on Thursday, though without enough votes to override a veto:

Mr. Frank quickly went on the offensive, seeking to undercut the administration's argument that homeowners in trouble should have known better. "No dumb people got America into this problem," he snapped. "You had to be really smart to understand collateralized debt obligation derivatives."

Needless to say, the profile adds, "Mr. Frank, who holds degrees from Harvard and Harvard Law School, understands collateralized debt obligations." Of course, you don't have to have multiple Ivies to become ensnared in the current housing crisis.

In fact, as the Washington Post reports today, the crisis knows no class boundaries. "Nationwide, from 2006 to 2007, the number of foreclosed properties listed at $1 million or more rose 50 percent, to 7,642, up from 5,091, according to RealtyTrac. And the number of foreclosed homes priced from $500,000 to $999,999 jumped 88 percent, from 52,836 to 99,457."

Some of that's deep in GOP territory.

Maybe George Bush will re-consider his veto threat. He's got enough Ivy League degrees to understand the problem.

Since the beginning of the year, when talk of a recession was first heard, Congress has been debating whether or to extend unemployment insurance (UI) benefits by 13 weeks -- as it has done during every single recession, with one exception, for the past 50 years.

The principal objection to such a proposal, which Bush opposed in the winter stimulus package is, as the White House press secretary said last month, that the president doesn't believe the extension is needed, "given that the unemployment rate that we have is historically and relatively low at just over 5 percent." (Note that the first bill Bush signed after the election of a GOP Congress in 2003 was -- that's right -- a 13-week unemployment insurance extension... when the rate was 5.8 percent.)

But increasingly, the focus of the UI extension debate is shifting away from the unemployment rate to what seems like a more logical barometer of the need for an extension: how long it takes to find a new job.

The latest voice to join that chorus is mainstream economics writer Robert Samuelson, opining in today's Washington Post:

When benefits were extended in early 2002, the unemployment rate was 5.7 percent. In 1991 the extension occurred at 7 percent. But so what?

What's wrong with this argument is that it ignores basic changes in U.S. labor markets. Over the past two decades, American businesses have gradually toughened their hiring and firing policies. In recessions, they resort more to permanent dismissals as opposed to temporary layoffs; in recoveries, they're more cautious in adding new workers.

It's harder to find a new job. Average spells of unemployment have slowly lengthened. The increase since 1960 has been about six weeks, estimates economist Gary Burtless of the Brookings Institution.

Nearly 1.4 million U.S. workers qualified as long-term jobless at the beginning of the year, more than twice as many as when the recession started in March 2001 -- and more than the 1.3 million who were long-term jobless the last time Congress temporarily extended benefits, in March 2002. In this environment, is the unemployment rate, per se, a logical reason not to extend unemployment benefits?

Congressional opposition to the Frank housing bill is coalescing around apparently dubious propositions ($).

[Antonia Ferrier, spokeswoman for House Minority Whip Roy Blunt (R-MO)] also took aim at the [Rep. Barney] Frank proposal. "This bill perversely rewards those who borrowed more than they could afford — their monthly mortgage payments get reduced with the government footing the bill. How is that fair to the millions of Americans who worked hard and paid their mortgages on time? And who ends up holding the bag if all goes south? No surprise, the American taxpayer."

Meanwhile, economist and Fed Chief Ben Bernanke provides an "expert" opinion:

"High rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets and the broader economy," [Federal Reserve Chairman Ben] Bernanke said Monday..."Therefore, doing what we can to avoid preventable foreclosures is not just in the interest of lenders and borrowers. It's in everybody's interest," he said.

...

The current housing crises has clobbered some borrowers home prices dropped. That left them with mortgages that are bigger than the value of their home. When that's the primary problem, Bernanke said the best solution may be reducing the amount that the borrower owes on the loan or some other permanent modification to the loan.

Fine. Helping distressed homeowners can help everyone. But surely we cannot stand in the way of the the almighty market! That would be disaster.

Republican talking points obtained by Roll Call also suggested housing prices must fall further rather than be propped up by a new government program, an argument also made by [Sen. Richard Shelby (R-AL)] Shelby.

"The correction in the housing market is a necessary reaction to a prolonged period of reckless lending and borrowing practices that helped take housing prices to levels that were simply unsustainable. For the market to stabilize, prices will need to return to levels that ordinary Americans can afford," the talking points read.

Or not.

Rising foreclosures add to the glut of unsold homes and that put more downward pressure on prices, aggravating the housing slump, he said. More rapid declines in house prices could have an "adverse impact" on the broader economy and the stability of the financial system, [Bernanke] said.

Photo by Flickr user msabcmom used under a Creative Commons license

By and large, the Bureau of Economic Analysts (BEA) at the Department of Commerce announced this morning an estimated GDP figure for the first quarter of 2008 of 0.6 percent -- the exact same figure as the last quarter of 2007 -- which pushes us back from the brink of "official" economic recession, though we are by no means out of the woods. The BEA report includes this summary analysis:

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE) for services, private inventory investment, exports of goods and services, and federal government spending that were partly offset by negative contributions from residential fixed investment and PCE for durable goods. Imports, which are a subtraction in the calculation of GDP, increased.

Note in particular the reference to residential fixed investment, reflecting a contracting housing sector, falling home prices and sales, and a rapid increase in home foreclosures, which are reaching an alarming rate. Per a RealtyTrac report released yesterday:

foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 649,917 properties during the first quarter, a 23 percent increase from the previous quarter and a 112 percent increase from the first quarter of 2007 -- one in every 194 U.S. households received a foreclosure filing during the quarter.

These two developments, taken together, may mean increased support for targeted housing-sector related legislation now moving through Congress. What it means for broader stimulus measures is uncertain, though the April unemployment report, due out on Friday, may have considerable bearing on prospects for such measures.

For additional analysis of the GDP estimate and its contributing factors by Dean Baker, co-director of the Center for Economic and Policy Research, see CEPR's GDP Byte, here

In yesterday's Daily Fiscal Policy Report, we noted that real average weekly earnings in March were up compared to February, while they were down compared to March, 2007.

Today, the BLS released data on real median weekly earnings, which, like average weekly earnings, have declined since a year ago.

Median weekly earnings of the nation's 106.5 million full-time wage and salary workers were $719 in the first quarter of 2008, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This was 3.8 percent higher than a year earlier, compared with a gain of 4.1 percent in the Consumer Price Index for All Urban Consumers (CPI-U) over the same period.

In case you didn't know (as I didn't 'til I stumbled on it), the Wall Street Journal maintains a number of statistical reports that economists use to gauge and forecast business conditions. These reports, issued by government agencies and business research groups, generally are accessible there for one month. Their Economic Indicators Archive is accessible here.

Among the reports:

• The Consumer Price Index
• The Employment Situation
• The Gross Domestic Product
• Initial Jobless Claims
• New Homes Sales

Good for what ails us.

Health Care -- Bipartisan Support for Blocking Bush Medicaid Rule: CQ reports ($) that a House bill that would block the president's Medicaid rule changes is gaining support among Republicans. The proposed rule changes would shift about $17.8 billion (over five years) in Medicaid costs to states. The bill, H.R. 5613, will be marked up today in the Committee on Energy and Commerce Health Subcommittee.

War Spending -- Iraq Supplemental May Have Additional Stimulus Spending: After last week's deterioration of employment data released by the government, Sen. Majority Leader Harry Reid (D-NV) and Sen. Debbie Stabenow (D-MI), along with Democratic House leaders, are calling for adding extension of unemployment benefits to the upcoming Iraq war spending bill. House Republicans have vowed to oppose additional stimulus spending. CongressDaily ($)

Inequality -- CBPP/EPI: Income Inequality Continues to Rise: The Center on Budget and Policy Priorities and the Economic Policy Institute have released a lengthy report analyzing state-by-state data on income trends. The report concludes that "The gap between the richest and poorest families...grew significantly in most states over the past two decades...In fact, the nation's longstanding trend of growing inequality accelerated since the late 1990s as incomes fell for poor families in a number of states." CBPP/EPI Report Executive Summary

Taxes -- "Extenders" Package Could Move Before End of May: Sen. Finance Committee Chairman Max Baucus (D-MT) hopes to introduce, mark up and bring the extenders package of tax cuts to the Senate floor before the start of the Memorial Day Recess in May. The legislation would be fully offset, cover two years (2008 and 2009), and cost about $50 billion. Baucus would not pin down a date for introducing the measure, but stressed the need to get work done early: "We've got to do as much as we can during this work period." BNA ($)