National Debt
The U.S. is running a $1.4 trillion deficit this year and has a national debt of nearly $12.1 trillion; that’s almost $40,000 for each person in America. The debt is bad for three reasons. First, it puts upward pressure on interest rates, which can slow down our economy. Second, because we are borrowing a lot of money from foreign governments, it put our fiscal sovereignty in someone else’s hands. Third, because our children will have to pay down the debt through higher taxes, we are putting their prosperity at risk. That is why we simply cannot continue to borrow money to live beyond our means.
Once our nation’s economy is back on track, we should take measures to reduce the debt. We are going to have to bring our expenditures in line with our revenues. And we’re going to have to shift resources from our less important priorities to our more important priorities. President Obama should publicly lay out his plans and goals for this now, so that there can be no doubt of his intentions.
The government must first cut waste and then cut spending; only then should the government consider raising taxes. The CATO Institute estimates corporate welfare programs and federal subsidies to top $90 billion annually, including over $30 billion for crop subsidies. Dan thinks this is one place to look for spending reductions, among others. But the real challenge is getting Congress to agree on what cuts to make. The president’s leadership will be vital here. He has at least two approaches. First, he could set targets now for the budget that will reduce the debt for the remainder of his term, and challenge the Congress (and himself) to meet those goals. Alternatively, he could establish a bipartisan commission that can present a debt reduction plan to Congress that would not be open to amendment.
Improve Mortgage Modification
Residential foreclosures are on the rise nationally, and markedly so in our own district; foreclosures are up 67 percent in Deerfield, 78 percent in Glenview, 97 percent in Highland Park, and 136 percent in Wilmette, over the same period last year. While there are some individuals who bought homes that were simply too expensive for them to keep, there are many others who could afford their homes if their mortgages reflected the current value of those homes. It is this second group that can benefit from mortgage modifications, which is the act of bringing the cost of the mortgage more in line with the current value of the house. It’s a win for banks because they still get a return on their investment and it’s a win for individuals who get to stay in their home. It’s a win for our communities because it means fewer foreclosures, which bring down property values for everyone.
President Obama’s Home Affordable Modification Program has funded $75 billion in an effort to encourage mortgage companies to modify home loans for those homeowners with adequate income statements and timely debt repayment history. It appears mortgage services have embraced the program to a certain extent, reducing 650,000 mortgages as of October 30 by an average of $576/month. But these modifications have been for three-month trial periods. Only 1,700 trial reductions have been made permanent, despite indications that many, many more would qualify. Neither Congress nor the administration should permit mortgage companies to game the system. If companies accepts financial incentives to modify mortgages, they must deliver on their end of the bargain.
Administration officials have sent teams to the top mortgage companies to prod compliance with both the letter and spirit of the Affordability program. Dan supports the government’s hands-on compliance monitoring now taking place on a daily basis at the largest firms. Moreover, progress on modifications should be made public per each institution.
See Videos of Dan at the Media Center