by Mitch Kokai
Senior Political Analyst, John Locke Foundation
David Bahnsen writes at National Review Online that prominent conservative commentator Sean Hannity makes one major mistake in his critique of President Obama’s economic record.
I more or less agree with the entirety of Hannity’s indictment of Obama’s economic record. The Obama administration has overseen the worst post-recession recovery since World War II, with tepid annualized GDP growth of below 2 percent despite unprecedented assists from the Federal Reserve (e.g. zero interest rates, quantitative easing). And by basing his argument around real-life data points that show how much our society’s most disenfranchised have suffered over the past eight years, Hannity has tapped into an effective and accurate way of discrediting the driving forces behind Obama’s economic program: Keynesian stimulus, increased regulation, and higher taxation on investment and productivity.
All that said, I part ways with Hannity over Obama’s housing record. Obama inherited a housing market still hung over from its pre-recession boom, which saw homeownership rise to the most cartoonishly high levels in recorded world history. In other words, of course homeownership is down since 2008; if it weren’t, well, we’d still be living in 2008! The housing crisis arose because millions of people who had absolutely no business owning a home became homeowners. Any honest analysis would conclude that the decline in homeownership in the early years of the Obama administration was the inevitable, necessary result of economic gravity.
Even if the decline in homeownership could be blamed entirely on Obama, though, there’d be a larger problem with Hannity’s argument: Why in the world does homeownership matter in gauging the health of an economy? Wasn’t that the very mindset that caused the financial crisis to begin with? A simple policy prescription exists that would vault the homeownership rate back to its pre-recession highs: Force the banks to ease underwriting standards, let Fannie and Freddie leverage their balance sheets to the moon, deregulate the subprime marketplace, and entice Wall Street to turn the mortgage-product machine on again. But does anyone actually want that? The reality is that a 63 percent homeownership rate driven by people who can afford their homes is far preferable to a 68 percent homeownership rate driven by homeowners who are living far above their means, racking up debt, and filling their balance sheets with risk. The quantity of homeowners is not as relevant, in absolute terms or as a percentage, as their quality. One would think the financial crisis made this abundantly clear.
Perhaps Hannity needs to learn a bit more about the recent housing boom and bust.