Monday, February 25, 2008

What's in a Word?

Word is Senate Majority Leader Harry Reid (D-NV) may 'fast-track' S. 2636, the Foreclosure Prevention Act of 2008 (text) to the Senate floor this week.

The bill provides $200 million for pre-foreclosure counselling, authorization for state housing finance authorities to issue $10 billion in additional mortgage revenue bonds to refinance subprime loans and provide mortgages for first-time home buyers, and court-supervised modification of home mortgages in bankruptcy -- all good things, though this last one is a controversial provision which might end up defeating the bill.

But not if S. 2636 can be sold as a stimulus measure (or bought as one: see the Wall Street Journal's Democrats Plan Housing-Related Stimulus Bill").

After all, if a $168 billion deficit-financed stimulus package could fly through Congress and get signed by the president in under a month, why shouldn't a practically no-cost stimulus package targeted at the economy's most distressed sector fare just as well? Answer (taking up our query of last week): if it's not really a stimulus measure.

The foregoing is not meant as criticism of S. 2636. It's meant instead to conserve the political capital to support genuine additional stimulus measures, should they become necessary -- measures that increase aggregate demand so as to avoid or reduce the odds of an economic recession. Use that capital now on a worthy bill that provides no stimulus and risk losing it for later when the economy might really need it.