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Think Progress

December 15, 2008

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, and Ryan Powers

ECONOMY

Commitment To Affordable Housing

In his weekly address on Saturday, President-elect Obama named New York City housing commissioner Shaun Donovan as his pick to run the Department of Housing and Urban Development (HUD), saying that few departments would be "more essential" in his effort "to stem the rising tide of foreclosures and strengthen our economy." "With experience that stretches from the public sector to the private sector to academia, Shaun will bring to this important post fresh thinking, unencumbered by old ideology and outdated ideas," said Obama. Before New York City Mayor Michael Bloomberg tapped him to run "what has been called the nation's largest affordable-housing plan," Donovan served at HUD in the Clinton administration, as both acting federal housing commissioner and deputy assistant secretary for multifamily housing. Politicians and housing advocates widely hailed Donovan's nomination. "Shaun Donovan is a brilliant choice for HUD. He is an expert on the full range of housing issues and has a proven track record of getting things done," said Sheila Crowley, president of the National Low Income Housing Coalition. "Thankfully, President-elect Obama has chosen a HUD secretary that is uniquely qualified to take on this task," said Sen. Patty Murray (D-WA), who chairs the subcommittee that controls HUD appropriations. If he is confirmed, Donovan will be a lead player in addressing "the worst economic climate in decades" as "American homeowners are reeling from plummeting home values and rising unemployment."

AMERICA'S HOUSING WOES: At this moment, "the U.S. economy is caught in a vicious downward spiral of declining home prices, escalating foreclosures, rising losses on mortgage-backed securities, and disappearing liquidity." In his announcement, Obama noted that currently "one in ten families who owns a home is now in some form of distress, the most ever recorded." Last month, "one in every 488 households faced some form of foreclosure filing." In the past year, cities across the nation have seen "a spike" in family homelessness, largely due to foreclosures. Credit Suisse forecast earlier this month that "8.1 million mortgages will be in foreclosure over the next four years, representing 16% of all mortgages." At the same time, "more borrowers are delaying mortgage payments for longer periods of time than in recent history." In October, the real estate research firm First American CoreLogic reported that "at least 7.5 million Americans owe more on their mortgages than their homes are currently worth." On top of that, another 2.1 million own homes that are "worth less than 5% more than the mortgages they're paying on them." "Problems in the housing market are not limited to those facing default or foreclosure," noted Andrew Jakobovics of the Center for American Progress. As housing prices fall, "homeowners across the country are losing the equity they have built up in their homes." As of October, inflation-adjusted house prices fell to mid-2003 levels at the national level. Housing sales and new construction are also struggling at lethargic rates.

HOUSING CENTRAL TO FIXING THE ECONOMY: In his announcement, Obama explicitly tied the housing crisis to the financial crisis, saying that "expanding access to affordable housing isn't just about caring for the least fortunate among us and strengthening our middle class -- it's about ending our housing mess, climbing out of our financial crisis, and putting our economy on the path to long-term growth and prosperity." As the Center for American Progress has long advocated, the mortgage mess must be addressed in order to rescue the economy. Housing experts say that Obama's choice of Donovan "may signal a more sweeping role for HUD" that could include "a more direct role in the oversight of the affordable housing industry." Donovan has demonstrated that he clearly understands the issues he will need to forcefully address should he be confirmed. Politico's Glenn Thrush reported this weekend that in 2004 Donovan foresaw the subprime mortgage crisis. "The future looked bright to almost everyone -- but not to Donovan, who was planning for the looming disaster," wrote Thrush. Years later, "Donovan is seen nationally as a pioneer in finding new ways to create and preserve low-cost housing."

BUSH'S MESSY HUD: Should he be confirmed, Donovan will inherit a housing department that has been badly disgraced by the Bush administration. In March 2008, Bush's second HUD secretary, Alphonso Jackson, resigned from his position as he faced ongoing probes "by a federal grand jury, the Justice Department, the FBI and the HUD inspector general." Under Jackson's watch, the nation spiraled into the worst housing crisis since the Great Depression, though Jackson insisted that increasing mortgage failures were simply a short-term "correction." Upon his resignation, "more than 30 current and former HUD officials and housing experts" told the Washington Post that Jackson "encouraged policies that threatened to exacerbate the mortgage crisis." Instead of working to ameliorate the housing crisis, Jackson focused his efforts on awarding lucrative no-bid contracts to his golfing buddies and erecting giant photo homages to himself. When Jackson resigned, Bush appointed then-chief of the Small Business Administration (SBA) Steven Preston to replace him. Preston, who is known to be a "Bush loyalist," had "no apparent housing background" when he was nominated for the position.

UNDER THE RADAR

IRAQ -- BUSH ON THE FACT THAT AL QAEDA WAS NOT IN IRAQ BEFORE WAR: 'SO WHAT?': In an interview in Iraq yesterday, President Bush defended the war in Iraq, saying it was "where al Qaeda said they were going to take their stand." Raddatz interrupted to point out that al Qaeda was not present in Iraq until after the United States invaded, to which Bush replied dismissively, "Yeah, that's right. So what?" He continued, "The point is that al Qaeda said they're going to take a stand." In the lead-up to the Iraq war, Bush repeatedly and insistently cited a link between Iraq and al Qaeda. When it turned out those links never existed -- and that the Bush administration may have willingly distorted information to suggest that they did exist -- Bush continued to tie Iraq to al Qaeda and the Sept. 11 attacks, even as late as 2007. Rather than take responsibility for the intelligence failures before the war, earlier this month Bush said cynically, "I wish the intelligence had been different, I guess." He has also repeatedly insisted that Iraq is "the central front in the war on terror," using the claim as justification for the war. Yet, as Raddatz points out, al Qaeda did not exist in Iraq until the U.S. invasion. The Bush administration has finally admitted "privately" that "Afghanistan is now the single most pressing security threat in the war on terror."

ADMINISTRATION -- ROVE WILL REPORTEDLY 'HELP LEAD' FIGHT AGAINT OBAMA'S ATTORNEY GENERAL NOMINEE: Senate Republicans, including Sens. Arlen Specter (PA), Chuck Grassley (IA), and Jon Kyl (AZ), are trying delay confirmation hearings for Attorney General nominee Eric Holder, raising questions about Holder's role in the 2001 pardon of Marc Rich. Grassley even tried to tie Holder to Gov. Rod Blajogevich (D), saying last week, "Public reports have just emerged that in 2004, the Governor of Illinois hired or sought to hire Mr. Holder." On Dec. 1, just one day after President-elect Obama formally nominated Holder, Karl Rove told the Today Show that Holder's record "will be examined" because he was the "one controversial nominee." On Friday, Senate Judiciary Chairman Pat Leahy (D-VT) released a statement noting that the Republicans initially praised Holder, but now seem to be taking their marching orders from Rove. Yesterday, on MSNBC's Chris Matthews Show, Washington Post reporter Ceci Connolly revealed that Rove is indeed "helping lead" the effort against Holder. "Word on the street is that Karl Rove is going to be helping lead the fight against Eric Holder when his nomination for Attorney General heads up to the Senate," she said.

IRAQ -- FORMER RUMSFELD AIDE CALLS SHINSEKI'S OPPOSITION TO RUMSFELD PLAN A 'LEGEND': 
In an op-ed today, Lawrence Di Rita, former special assistant to Donald Rumsfeld, decries the "myth" surrounding Gen. Eric Shinseki's 2003 statement that "several hundred thousand troops" would be needed secure Iraq. Di Rita claims that Shinseki in fact supported the Rumsfeld plan because he did not speak up against it in meetings. Di Rita mocks Shinseki's independence as "one of the most enduring myths of the Bush presidency" and "a legend." In reality, in his 2003 congressional testimony, Shinseki testified that "hundreds of thousands" of troops would be needed for "post-hostilities control" over land "that's fairly significant [in size] with the kinds of ethnic tensions that could lead to other problems." The Pentagon, in contrast, assumed that there would be minimal internal resistance, thus no need for so many troops. As for why Shinseki was quiet in meetings, Di Rita fails to mention that the Pentagon quickly "castrated" Shinseki by ridiculing him publicly. Two days after his testimony, for example, former Pentagon official Paul Wolfowitz said that the estiminate was "wildly off the mark." Furthermore, while Di Rita wrote that "Shinseki was not forced from office, as ThinkProgress has documented, Rumsfeld announced Shinseki's successor 18 months prior to Shinseki's retirement -- a strong signal that the Pentagon would not tolerate dissent.


THINK FAST

"Thousands of Iraqis took to the streets Monday to demand the release of a reporter who threw his shoes" at President Bush during a press conference yesterday, praising the journalist as a "hero." The television station that employs the journalist has also demanded his immediate release, saying it "fear[ed] for his safety."

Illinois Gov. Rod Blagojevich "has no plans of resigning today or tomorrow," a spokesperson said yesterday. "He still signs bills as governor, and he wants to see details."

A loophole in the bailout legislation may allow executives at Wall Street companies to continue to earn large compensation packages. Due to a last-minute change in legislative language sought by the Bush administration, Congress" efforts to limit pay may prove toothless. "The flimsy executive-compensation restrictions in the original bill are now all but gone," Sen. Chuck Grassley (R-IA) said.

President-elect Obama will announce his energy and environment team -- led by Dr. Steven Chu as Secretary of Energy -- Monday afternoon at a press conference in Chicago, "continuing a steady roll-out of his Cabinet, which is now nearly complete." Sen. Ken Salazar (D-CO) is the leading contender to be named Interior Secretary.

"The number of reported attacks against LGBT people increased 24 percent in 2007 over 2006" and is expected to rise again this year after a "rash of attacks" in recent months, according to the New York City Anti-Violence Project.

Sens. John McCain (R-AZ) and Russ Feingold (D-WI) are teaming up once again, this time to pursue earmark reform. Roll Call reports that while the political climate may be receptive to their efforts, they may meet some resistance if they "look to move the authority for policing earmarks out of Congress, as many reformers have called for."

Yesterday on ABC's "This Week," Sen. John McCain (R-AZ) said that he would not necessarily support Gov. Sarah Palin (R-AK) if she decided to run for president in the future. "I can't say something like that. We've got some great other young governors. I think you're going to see the governors assume a greater leadership role in our Republican Party," he said.

"Widows of war veterans have been wrongfully denied up to millions of dollars in government benefits over the past 12 years due to computer glitches that often resulted in money being seized from the elderly survivors' bank accounts."

With unemployment claims "reaching their highest levels in decades, states are running out of money to pay benefits, and some are turning to the federal government for loans or increasing taxes on businesses to make the payments." Benefits may become insolvent in 30 states over the next few months while funds in Indiana and Michigan have "already dried up."

And finally: Expecting a tourist bonanza around Jan. 20, the DC Council recently "voted in favor of extending last call to 5 a.m. and allow bars and restaurants to serve food around the clock during inauguration week." Sens. Dianne Feinstein (D-CA) and Robert Bennett (R-UT) objected in a letter to Mayor Adrian Fenty, however, saying that were "deeply concerned" that the plan "could seriously strain law enforcement resources." In response, a group of Washingtonians has launched SaveTheParties.com. The petition backing the Council's change reads: "The people voted overwhelmingly for change, and we want to celebrate that change big-time!"



GOOD NEWS

New York state officials will now let "married same-sex couples list both their names on their children's birth certificates."

BLOG WATCH

THINK PROGRESS: Vice President Cheney will reward Fox News's Chris Wallace with an exclusive interview next Sunday.

WONK ROOM: The impending human capital crisis: "Torrent of American talent" is being "reduced to a trickle."

YGLESIAS: What "equality"  in the U.S. really looks like.

DAILY DISH: Reuel Marc Gerecht uses six different euphemisms to describe torture in an op-ed defending it.

STATE WATCH

NEW YORK: To compensate for a budget deficit, Gov. David Paterson (D) "will propose a $4 billion package of taxes and fees on a range of items, from sugary soft drinks made by Coca-Cola and Pepsi to luxury items like furs and boats."

CALIFORNIA: Los Angeles Mayor Antonio Villaraigosa ponders plan for voluntary layoffs of city workers.

ECONOMY: Thirty states are at risk of having unemployment benefits become insolvent over the next few months.

DAILY GRILL

"[I]f you think we're going to spend a billion dollars of our money [rebuilding Iraq], you are sadly mistaken."
-- Former defense secretary Donald Rumsfeld, 2003

VERSUS

"An unpublished 513-page federal history of the American-led reconstruction of Iraq depicts...a $100 billion failure."
-- New York Times, 12/13/08

INTERNSHIPS

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