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| President Obama speaks with homeowners in Las Vegas, source: cnn.com |
President
Obama has clearly been growing impatient with Congress in Washington as they have
not yet passed his American Jobs Act. The frustration comes after this week’s
unanimous vote from Senate Republicans to block the vote as well as the House
Republican’s refusal to put the plan to a vote at all. Despite the President’s
pleas and various stump speeches, he has been unsuccessful in getting his plan
passed. This has prompted President Obama to take matters into his own hands.
He plans on taking various executive actions in order to enact the proper
programs to help the deteriorating economy.
Evident in the title of this post, President Obama has
organized a trip out West in order to promote his plans to re-shape the
economy. He focused primarily on housing loans in Las Vegas and student loans
in Denver, hence the terrible “Loan Ranger” pun Obama intends on making changes on his own using executive authority. This trip also included stops
in California cities Los Angeles and San Francisco for fundraising purposes.
Obama intends on using his executive authority that oversees federal laws and
agencies in order to prove that he is not completely incapable of instating his
own plans for the country. However past uses of executive power simply resulted
in more modifications and re-writes from Congress. Aides of Mr. Obama claim that these recent
surges of executive orders are less far-reaching than the legislation that is
now before Congress.
Obama’s first stop on his Western trail was Las Vegas in
which he attended a campaign event at the Bellagio hotel and casino. Shortly after,
he addressed a group of homeowners at a private residence about his new plans
in home refinancing. Las Vegas is an appropriate place to make such a speech
because it has been greatly affected by the housing market crisis as their home prices are down
53%. Obama’s plan consists of two modifications to the already existent Home
Affordable Refinance Program, which up till now helped 894,000 borrowers since
its enactment in 2009. In order to broaden the range of requirements for the
program and to subsequently help more people the Obama Administration will make
two important changes. The first and most important will be to allow homeowners
who owe more than 125% of the market value of their homes to obtain the new
loans given out by the refinancing program. The result of this modification
will allow more people to be eligible for refinance and will save them hundreds
of dollars a month in mortgage costs. The second change will be the elimination
of refinancing fees and lower closing costs which Obama hopes will allow
consumers to shop around for better rates.
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| Source: Google Images |
Much criticism follows this announcement.
Although many people see the housing crisis as one of the main factors for the
downfall in the economy, many believe that Obama’s modifications will not help
in the long run. There are 3.5 million people who have foreclosed on their
houses, or are four months behind, that will not benefit from Obama’s plan. It
seems that his plan is more of an economic stimulus that would reduce eligible homeowner’s
monthly payments so they can spend the money elsewhere. Overall, Obama’s
modifications to the program that already exists will no doubt help people with
little or no equity on their home but will in no way solve the housing market
crisis.
The last stop of Obama’s trip was
in Denver where he announced plans to help relieve student loans. Obama
addressed the issue with student loans and suggested his plans to relieve such
debts. The first is to advance the start date of the loan repayment program based
on income to help struggling graduate students. The current Income-Based
Repayment Plan charges graduate students who enroll 15% of their monthly
discretionary income to pay off loans and after 25 years the debt is forgiven. Congress
recently signed a law that would begin in 2014 to lower the monthly payment percentage
to 10% of the discretionary income and relieve debt after 20 years. Obama seeks
to advance the start time of that law to 2012. The other proposal is to
encourage graduate students with two or more kinds of federal loans to
consolidate them which would result in an interest break rate of 0.5%.
The recent drive from President
Obama to enact certain executive orders can either be seen as a need to make
things happen while avoiding the politics of Congress or as a campaign move in order
to prove the vitality of Obama and his policies, or both. In many ways this
trip out West was a mix of both business and campaign fundraising. It was
estimated that the Obama campaign would collect up to $4 million dollars at six
fundraisers in three states over a three day trip. An impressive figure that
proves that Obama is still able to win over fundraisers but does not secure a
win in the general election.
Sources:
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