As the GOP presidential candidates campaign in Florida before heading to Nevada, two of the states hit hardest by the mortgage meltdown, it’s hard not to notice that their proposals to fix the housing market range from piecemeal to nonexistent. Some Republicans are concerned that the party’s eventual nominee could find himself vulnerable on a key issue against President Obama next fall.
Mitt Romney set the tone for Republicans last fall when, asked about the housing crisis, he told The Las Vegas Review-Journal editorial board: “Let it run its course and hit bottom.”
Pressed during last week’s two presidential debates, the candidates argued for a free-market approach. “Let capitalism work. Allow these banks to realize their losses,” said Rick Santorum. Pennsylvania’s former senator then said he would give homeowners tax deductions on losses incurred by selling their houses.
That was about the only policy idea to come up in either debate. Romney and Newt Gingrich focused on attacking each other over who profited more from the housing meltdown. Neither mentioned solutions to improve the situation.
The rhetoric and laissez-faire policies are particularly jarring now, while the White House hopefuls campaign and advertise in two fall battleground states that are reeling from foreclosures. Nevada had the highest foreclosure rate in the country last year and Florida had the seventh-highest, according to RealtyTrac.
A December report from the Center for Housing Policy and other groups found that the eight metropolitan areas with the highest foreclosure rates in June were all in Florida. One of out of every 360 homes in Florida was foreclosed on in December, according to Carrie Blanchard, director of research and public policy at the Florida Chamber Foundation. That was far worse than the national rate of one in every 579 homes. “We went down way deeper than a lot of states did, and in terms of employment, it really hit us,” said Blanchard. “We lost half of all construction jobs.”
The housing issue is very much present in campaigns for both Florida's Tuesday primary and the Feb. 4 caucuses in Nevada, where unemployment is 12.6 percent, the highest in the nation. Romney’s campaign is airing TV ads in each state about Gingrich’s work for Freddie Mac, the giant government-backed mortgage agency that Republicans say played a central role in the 2008 housing bust and Wall Street collapse. "While Nevada families lost everything in the housing crisis, Newt Gingrich cashed in," a narrator says in the Nevada version.
Gingrich in turn is accusing Romney of profiting off foreclosures via a Goldman Sachs investment fund. “He owns a Goldman Sachs subsidiary that forecloses on Floridians. He is surrounded by lobbyists who are paid by Fannie Mae and Freddie Mac to stop reform,” Gingrich said last week.
In his State of the Union address, Obama outlined a renewed plan to let some borrowers refinance on their mortgages and a high-profile commission to investigate the meltdown and what can be done about it. The initiatives give Obama a cudgel to use on the campaign trail as he draws a contrast to his GOP foes, whom he’ll say are allied with big business at the average person’s expense.
In a Republican primary where voters distrust government solutions of any kind, the GOP candidates’ aversion to concrete housing policy proposals isn’t a liability. But some Republicans argue bluntly for some government involvement – among them Nevada Gov. Brian Sandoval, who has said other states and the GOP candidates should learn from his state’s program requiring mediation between mortgage holders and financial institutions to keep people in their homes.
Party operatives and officials worry that in a general election, the issue might hurt. David Johnson, a longtime GOP official in Florida, said that right now, the candidates have an “incomplete” on housing. “When we go into the fall, there’s going to have to be more of tangible steps they can take to get it moving again,” he said.
The key, Republicans say, is showing a sensitivity to the plight many homeowners are facing. Their plan doesn’t have to call for massive government intervention. Rather, the nominee just needs to show some credible concern and a proposal of some sort.
So far, “I don’t think it’s necessarily a problem as much as a lost opportunity,” said Pete Ernaut, a Nevada Republican strategist. “I think there’s a great opportunity for the Republican nominee to come forward with a market-driven solution that makes some sense and that banks and mortgage companies can buy into.”
Not all Republicans are convinced that beefing up their party’s housing prescription is wise, politically or substantively. Competing with Democrats over policies that focus on government intervention puts the party on politically disadvantageous terrain. “The Democrats are always going to outpromise us, so what’s the point of even going down that road?” said Florida Senate Majority Leader Mike Haridopolos. “If we promise $5, the Democrats are going to promise $10.”
The GOP nominee can also pin the housing market’s woes on Obama, who will have had nearly a full-term to turn it around without success. Voters will distrust any new policies from the president after the ones he pushed for four years failed to make a difference, argued Tallahassee-based Republican consultant Rick Wilson, especially if the economy remains in a slump. “We’ve had a foreclosure rescue program in place since beginning Obama’s term,” he said. “There’s been no meaningful difference in Florida.”
A new Suffolk University poll of the state bolsters his point – 56 percent of Florida voters surveyed said the housing market still isn’t improving in Florida. Still, Obama appears to be on the right side of the political ledger. Fifty-eight percent of Americans in a new Gallup poll say the government should take further steps to stop foreclosures, including 61 percent of independents. A not-insubstantial 31 percent of Republicans even indicated support for government intervention.