Michael D. Shear
Washington Post White House Reporter
Wednesday, February 18, 2009 11:00 AM
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Washington Post White House reporter Michael D. Shear, was online Wednesday, Feb. 18 at 11 a.m. ET to discuss the latest White House news, including the signing of the economic stimulus bill, President Obama's approval to send 17,000 troops to Afghanistan and more.
Submit your questions and comments before or during today's discussion.
Michael D. Shear: Good morning everyone. It's a cold day here in the nation's capital -- icy drizzle and grey skies. But that doesn't mean we can't have a sun-shiny discussion about politics. So let's have at it: stimulus, job losses, bank foreclosure, stock market plunges, nuclear missile tests. There's nothing we can't discuss.
St. Paul, Minn.: Hi Michael -- Thanks for taking questions today. I recently heard about a House member touting all the great things that the stimulus package was going to do for his state -- a Republican House member who voted against the bill. Shameless hypocrisy or politics as usual? (or maybe those are the same things...) It seems like a lot of Republicans want to associate themselves with Obama's popularity without the risks posed by bipartisanship -- true bipartisanship. What do you think? If the bill actually leads to some positive results, what then?
Michael D. Shear: This is a good question to get us started. I wrote an article that touched on this point the other day. Because the Republicans largely abandoned the stimulus bill, the Democrats are the ones that will own it -- for good or ill. If it succeeds in producing jobs and getting consumer spending going again, I suspect there will be Republicans who regret their opposition. On the other hand, if the consensus in six or eight months is that it has failed, or was the wrong mix, then the Democrats will have to accept the consequences of their decision to push for it.
In the meantime, I'm sure there will be people on both sides -- Republicans who voted against it who want to praise parts of it, and Democrats who backed it yet still want to criticize parts of it.
Raleigh, N.C.: Good morning. How comfortable are you in the field of macroeconomics? In these complicated times, how do you educate yourself on macroeconomics before writing an article on the stimulus, or the bank bailout?
Michael D. Shear: This is a good question. I certainly don't claim to be an expert in macroeconomics, microeconomics or any economics. The thing to do, I think, is for reporters to talk to as many truly smart people as we can. As you say, these are very complicated times.
I do believe that, generally, what a good reporter can do is to be effective at making complicated subjects understandable to people who are not experts. Hopefully, that's what we're able to do.
washingtonpost.com: Politically, Stimulus Battle Has Just Begun (Post, Feb. 16)
Tampa, Fla.: How will the Democrats react to the unraveling of Sen. Burris? If Burris does not resign (which I'm almost certain he won't) and chooses to run for the seat in two years, I can't imagine he'll be able to defeat a legitimate GOP challenger. So do the Dems back someone against him in the 2010 primary?
Michael D. Shear: You know, 2010 is a while from now. I think the more immediate question is how Sen. Burris survives the next few weeks. It's hard to imagine that there won't be calls for his resignation. And at some point, the case against Gov. Blagojevich will reveal the tapes that prosecutors have. Is it possible that Sen. Burris is on some of those calls? It's quite a situation.
McLean, Va.: Michael, what will the Obama housing plan do about adjustable rate mortgages? I know they're focused on "problem" mortages, but a lot of people are going to have a problem if they have to "adjust" to a significantly higher mortgage payment. How will this plan address that? Thanks.
Michael D. Shear: The details of the plan are beginning to come out. See our article on our homepage now.
Basically, the idea the Obama administration is pushing would provide money and incentives for banks to restructure loans. I believe that would involve people who are already behind on their payments, but also people who are in danger of defaulting because of a loss of a job or an adjustable rate mortgage that will be changing.
washingtonpost.com: Obama to Unveil Foreclosure Prevention Program (Post, Feb. 18)
Kettering, Ohio: The Chicago Tribune editorial of today is calling for Burris to step down. I know there is no chance of that happening. But how tenuous is his position in the Senate?
washingtonpost.com: Roland Burris, Resign (Chicago Tribune)
Michael D. Shear: See. That didn't take long. (I said in my answer a few minutes ago that there would be calls for Burris to resign.) And here they are.
Alexandria, Va.: Does the president's mortgage plan require legislation?
Michael D. Shear: I do not believe the plan requires legislation. But the details are still leaking out in advance of the president's speech this afternoon, so there could be pieces that would need to get congressional approval.
Detroit, Mich.: We did all the right things and are current and able to pay our mortgage. Unfortunately, we bought at the wrong time (even though we got the house for much lower than the asking price), our house is worth less than we paid for it. It seems that we will be able to refinance under President Obama's plan? Is this the case and if so, how long before we can take advantage of this?
Michael D. Shear: Here's a line from the president's speech, as provided in an advance text. It seems to suggest that people like you will get some help, though I am not aware of the specific details.
"The plan I'm announcing focuses on rescuing families who have played by the rules and acted responsibly: by refinancing loans for millions of families in traditional mortgages who are underwater or close to it," Obama will say at a speech in Mesa, Ariz., according to an advance text released by the White House.
New York: Thanks for taking questions. Does the administration's new mortgage plan do anything to lower mortgage rates for new buyers? There had been talk about ways of lowering mortgage rates to 4.5 percent --whatever happened to that idea?
Michael D. Shear: I believe the administration looks with disfavor on the idea of just making a blanket reduction in mortgage rates for everyone. To do that, the government would have to compensate lenders for all those below-market rates, and that would cost hundreds of billions of dollars.
Instead, their approach seems to be targeted at the people who are already in default or in danger of it.
Washington, D.C.: Why didn't we get a one-time stimulus payment (like under President Bush) instead of $13 per week? What am I supposed to do with $13 per week? Stimulate what?
Michael D. Shear: The problem, according to some economists, with the one-time payment is that a lot of people simply used it to pay off credit card bills or put it into savings -- two things that don't help stimulate the economy.
the idea with the $13 per week is that you -- and millions of others -- will simply spend that slight increase on stuff. Individually, it may not seem like a lot, but -- in theory -- added together it's a lot more money into the eocnomy.
New York : Burris on the way out? You guys are totally screwed. What will you find to hold our interest? Franken, if he gets in, isn't funny anymore. There's always Bachman, though, who was worrying the other day that we're running out of rich people. There's possibilities there. Still, Sen. Burris, we hardly knew ye.
Michael D. Shear: I've been in this business long enough to be optimistic about the fact that we will never run out of interesting characters to write about.
Chicago, Ill.: Assuming you can pay your monthly mortgage payments, what difference does it make what your home's present value is? I understand how being "underwater" is relevant if you have a home equity line of credit, since you've borrowed money based on collateral that no longer exists. But for a mortgage, where you purchased a home and borrowed money to pay for it, who cares whether the home's value has since gone up or down? So long as you can make the payments, suck it up and make them.
Michael D. Shear: As I said before, I'm no expert on these issues. But I believe the concern here is that people will voluntarily walk away from their homes if they no longer have the value they used to.
For example, if a person has a $450,000 mortgage for a house that is now worth $250,000, they may simply walk away and allow the home to be foreclosed rather than keep paying on a loan that they don't beleive will ever be worth it.
That's my understanding, though your point is valid. For many people, simply staying put and letting the home value come back up is the right thing to do.
Springfield, Va.: "...by refinancing loans for millions of families in traditional mortgages who are underwater or close to it." So those of us who bought modest homes a few years ago, and did not refinance or equity loan ourselves into trouble will pay to subsidize those who bought too much house and now have buyer's regret? What about personal responsibility that Obama spoke about during his inauguration?
Michael D. Shear: This is definitely going to be the biggest reaction from a lot of people.
The administration will attempt to argue that the foreclosures are affecting both the neighborhoods, where values of the responsible people's homes are coming down. But also, they will say that the entire economy is being dragged down by the foreclosures, and that people like you will be affected if something like this isn't done.
It will be interesting to see whether people buy the argument, or remain angry about it.
Poplar Bluff, Mo.: Michael, thanks for the questions. I am sick and tired to hear the talking heads talk about how Americans are irresponsible about spending and so forth. However, the government gives us tax breaks and credits and wants the average American consumer to buy houses and cars. Which is it, to spend or not spend, that is the question?
Michael D. Shear: That's a good point. The government wants us to save when we are spending and spend when we're not. I think economists would argue that, while saving is generally good, they need people to spend now to get the economy back on track.
Rockville, Md.: I am retired and my wife is still working. But why does she get more of a tax cut than I do? I pay as much taxes as she does. (more to be exact.)
I just get $250.00.
But I will rush out and spend it.
Michael D. Shear: I'm not sure of your exact situation. But I believe that much of the tax cut in the plan comes from a payroll deduction. If you are not on a payroll, I don't think you get as much.
Navy Yard, SE D.C.: What's the status of the ethics investigation concerning Rep. Rangel's tax issues and other allegations? When can we expect to hear something from the House Ethics Committee?
Michael D. Shear: I don't know the answer to that. I'll see if I can find it before the end of the chat.
Denver, Colo.: Hello,
I was listening to NPR this morning and understand that GM plans to close 14 plants (5 in North America) and layoff 54,000 additional employees. How does pumping even more money into these companies improve the economy when they are reducing rather than creating jobs? I think those auto companies not borrowing federal money should be the ones to stay in business.
Michael D. Shear: This is a good point. I believe the answer has to do with short-term versus long-term assessments. The government -- and economists--believe that the auto industry needs to restructure in order to be long-term viable companies. That means getting to a size and efficiency that is more in line with the demand and with the other companies that are more successful. If they can do it, the theory goes, then the government investment will be worth it.
Helena, Mont.: Re underwater on home mortgage -- the thinking of Obama is also to stem the falling home prices. If you have a house that you paid $250,000 for 10 years ago but is appraised at $150,000 today, you have sustained a loss. I think the administration is looking at these problems and tryng to keep EVERYBODY from being underwater. Which could happen in certain localities, like Las Vegas, Arizona, and Florida.
Michael D. Shear: I think this is right.
Resign?: A man who has constructed his own mausoleum with engravings of his accomplishments (there's still more room!) is not about to resign.
Stimulus . . . Mortgage relief question -- I bought a house in 2006 with a 7 percent fixed interest rate. The property value has gone down and I would love to have a lower interest rate. Never missed a payment but it's getting more difficult. Any chance this new program will help me? Are you still assessed thousands in closing costs through these programs?
Michael D. Shear: I don't think all the details are known about who will qualify and who won't for the refinancings. But I somehow doubt that you would be first in line, especially if the value of your house still exceeds the amount of you mortgage.
The closing costs question is a good one. I don't know. Stay tuned.
Chicago, Ill.: Thanks for taking my question about "underwater" mortgages.
I'm with Springfield here -- this is about personally responsibility first and foremost, and it infuriates me that the most reckless Americans out there are getting free rides from their government while saps like us who actually did the right thing are paying for it. You can't afford your "home"? Then lose it and live somewhere you can afford.
I'm losing my job next month, and right now I'm trying to refinance, but I can still pay my mortgage because when I bought my home five years ago I bought something I knew I could afford. If people owe too much and walk away from their homes, that's their call. Not my problem.
Michael D. Shear: I think many people agree with this sentiment.
Washington, D.C.: Count me as one of the many people who aren't buying the "help out the irresponsible while doing nothing for the responsible" argument.
And by the way, I'm underwater on my 401(k) -- can the government bail me out of that?
No, I didn't think so.
Michael D. Shear: Aren't we all underwater on our 401(k)'s. If only...
D.C.: Re: the payroll tax cut -- what if you are self employed or a freelance contractor? I am not on a payroll, yet I pay double FICA as a self-employed contract worker. I am having trouble finding contract work in this slowdown, yet I am not considered unemployed, nor can I file for unemployment. Is there ANYTHING in this stimulus/tax cut plan for the millions of self employed contractors out there? I feel like Congress continues to ignore the fact that there are millions of us out there earning a living and paying taxes who are not in "traditional" employment situations. This is true in their health care policies as well.
Michael D. Shear: This is getting well beyond my knowledge here. My wife owns her own business, and isn't on any payroll. I don't know whether she gets any compensation from that particular tax cut.
There are other tax cuts and benefits in the stimulus that have nothing to do with payrolls. There's a child tax credit and a credit for college tuition. Both have income limits, I believe.
Madison, Wis.: The president has mentioned increasing funding for the State Department. Is that addressed in this stimulus package?
Michael D. Shear: I don't believe so. Spending more on an increased State Department would not be considered stimulus, I don't think. But I would expect that to be considered as part of the budget deliberations later this year.
Michael D. Shear: Ok everyone. Time's up.
See you next time.
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