FARAI CHIDEYA, host:
From NPR News, this is NEWS AND NOTES. I'm Farai Chideya. Last night Hillary Clinton and Barack Obama duked it out in one more debate. We're going to talk a little later to people who can put what they said in perspective. But first, we are digging into one of the biggest and international issues, the mortgage crisis. Thousands of homeowners have mortgages greater than what their homes are worth. A new bill aims to change that, but at what expense to the economy? With us we've got Melissa Harris-Lacewell, a professor of politics and African-American studies at Princeton, and Robert Traynham, D.C. Bureau Chief for the Comcast cable network CN8. He's at our NPR headquarters in Washington. Hi, folks.
Mr. ROBERT TRAYNHAM (D.C. Bureau Chief, Comcast Cable Network CN8): Hi, Farai.
Professor MELISSA HARRIS-LACEWELL (Princeton University): Hi.
CHIDEYA: So Robert, let me start with you. The bill aims to ease the strain on borrowers, reducing the payment obligations to the market price of their home. That could be good news for folks who've got mortgages. But is it going to be good news for the economy? What do you think?
Mr. TRAYNHAM: Well you know you're right. It's good news potentially for the homeowners but it's not so good news for the lending associations out there where candidly speaking, they're going to say, well, wait a minute. You took out this loan for a certain amount. Now regardless of what your house is worth, this is how much you owe us. So it's not so good for the economy overall because most financial individuals would say, you know what, we need that money to go back into the economy. We need people to be in debt to a certain degree so that that fuels the economy.
Republicans also on Capitol Hill, Farai, are also balking at this. And candidly speaking, I'm not sure this actually has enough steam to pass the United States House and the United States Senate.
CHIDEYA: Melissa, first of all, what do you think of the proposal and secondly, do you think it's going to pass?
Prof. HARRIS-LACEWELL: Ultimately I think that this is not a good proposal. You know this, I'm one of those people who really hates the story of the Prodigal Son, where the guy gets to go out and make a mess and when he comes back, the father kills the fatted cow for him and makes happy.
CHIDEYA: You're just bitter.
Prof. HARRIS-LACEWELL: I am a little irritated actually, because of course there are many things that we invest in which could in fact lose value. You know, everything from our stocks and bonds to let's even say it, our college education.
CHIDEYA: And not to mention that big screen TV.
Prof. HARRIS-LACEWELL: Right. I mean plenty of things in which, that we take out debts for which are worth less after we bring them home. Everybody's new car that they're driving right? But we actually don't correct that by going through and changing your level of indebtedness. You are indebted on the day that you sign the contract. And I think there are very real reasons why we don't want to engage in circumstances where we are telling lending institutions that the government's going to come in or allow judges to come in an shift that accountability.
I think that's exactly not what we want. Now there are real things the government can do to provide relief. But I think that this is a bad idea.
Mr. TRAYNHAM: Farai, may I touch on that for a second?
CHIDEYA: Mmm hmm.
Mr. TRAYNHAM: It actually also sets a very, very bad precedent for judges where they can say, well you know what, we did it for this case. We should do it for this case. It creates a slippery slope, where many Republicans on Capitol Hill say you know what? Enough is enough. She is exactly right where you know, you have an obligation. Regardless of whether it's a good obligation or a bad obligation to repay your debt regardless of how much that is. And a lot of folks on Capitol Hill are saying, well wait a minute here. We are always - we should be responsible adults number one, but also number two, there is a sense of responsibility that on your part, where you have to pay that debt back regardless of how much you owe.
CHIDEYA: But let me put it in this context, Robert first and then Melissa. There are things called corporate write-downs. There are ways for corporations to deal with losses in the short term and mid range that regular human folks don't have. Is it a case of saying well, okay we're doing a write-down here and letting the chips fall where they may?
Mr. TRAYNHAM: Yes and no. I mean the only other good thing about this is that regardless of how much in debt you are with your house, traditionally you always get your return back with your house. Though you may not get that return back in the next five or six or seven years. But over the lifespan of your mortgage, whether it be 20 or 30 years, you typically get your money back in some way, shape or form. So it's slightly different although I see your point Farai.
CHIDEYA: Melissa?
Prof. HARRIS-LACEWELL: Yeah. I mean absolutely but I don't think we solve the problem of corporate welfare our of you know, the sort of corporate buyouts by them extending bad policy to broader groups. In fact, I think we simply should draw back some of the ways in which we undergird corporations which also fail to, you know, live up to their debt burdens. Now I'm not saying that on one should intervene. That everybody should just take their loss and no go on about it. But part of what happened here was, the ways in which the unregulated market or the de-regulation of the market allowed a kind of gaming system for those who were providing mortgages, so that many people ended up in mortgages that they simply should never have been in from the beginning.
If instead we look back at a kind of a post-World War II model, where what we did was make housing more affordable by providing a variety of subsidies to get families into homes that they could actually afford, yes, it reduced the profit margins. But it created a more stable circumstance in which we now have people who are in their fourth generation of profiting from those early FHA homes.
CHIDEYA: Let me move on to something else more election-related. Senator Christopher Dodd threw his weight behind Barack Obama this week. The senator from Connecticut pulled out of the presidential race after the Iowa caucuses and he's worried that the Democrats are taking too long to pick a nominee. He basically said, if the nomination goes on too long, the Democrats are going to in-fight and lose. Melissa, do you think that that's a real risk?
Prof. HARRIS-LACEWELL: Well I certainly think it's a real risk to imagine that the Democratic Party can certainly win this election. They might win it but this is, in some ways, the Republican Party's election to lose even though it seems like how is it possible that John McCain could beat either one of these two people who are still standing, either Clinton or Obama.
So I do think that Dodd's right, that now it's time to start thinking about questions of the electability of the candidate as well as kind of you know, so what's good for the party in a broader sense. This is not just a presidential election year. We are also voting for the U.S. House of Representative, for a third of the U.S. Senate and extremely importantly, for the state house, the state legislatures and governorships which will be critical for redrawing in 2010, you know, during the time of the census, re-drawing these districts. It can't be just that our candidate wins. It's got to be that the whole party wins.
CHIDEYA: Robert, when you take a look at Senator Dodd, he's also a superdelegate. Is that going to have any influence, his decision to support Obama on the other superdelegates or even just his question about when or not the Democrats are going to set themselves on fire?
Mr. TRAYNHAM: Yes. He not only is a superdelegate but he also is a former chairman of the DNC under the previous Clinton Administration. He's an elder in the party. He is a senior senator from Connecticut. He's been around the block more than once. He is exactly right. All of my Republican friends are telling me that they are just salivating at this fight on the Democratic side, where literally they have popped open you know, the soda pop and popped some popcorn because this is an absolutely fascinating conversation that the Democrats are having amongst themselves as opposed to you go forward with home and change with Senator Obama or do you go with experience with Senator Clinton.
Senator Dodd is exactly right. If in fact this continues to go on, to use Howard Dean's terminology, he'll have to probably bring both sides into a room so they can actually hash this out before a brokered convention, because it looks like that's exactly where this is going.
CHIDEYA: Well what about the Republican side? Senator McCain was - you know, he wasn't always a shoe-in. He was struggling for a while and he actually applied for Federal funds. Instead of actually taking them, he used it as collateral so that he can have his own money. Now the Democrats are basically beefing and they want the government to see if McCain exceeded his spending limits. How do you - this is all about campaign finance law and Senator McCain has been in the middle of it as a legislator. Do you think he's broken any rules - either legally or morally?
Mr. TRAYNHAM: You know, it's interesting you say that because from a legal standpoint, it appears that Senator McCain has not broken any laws. From a moral and ethical standpoint that's a different story. Senator McCain has always backed all of his candidacies for the presidency when he ran back in 2000, also when he ran for the United States Senate for reelection on this premise if you will, that he is better on the issues when it comes to campaign finance reform. My goodness, he is the one who altered campaign finance reform back in 1988 or excuse me, 1998 with Russ Feingold. So this is a very interesting dilemma that he's in, at least from a rhetorical standpoint, although, Senator Obama to be fair, also said that if in fact he was going to be running for president, this was eight months ago when no one thought that he would have a shot at the Democratic nomination, that he would also accept public financing. And now it appears that Senator Obama is reneging on that promise. So you know, there's a little bit of he said she said there and to use Senator McCain's words, there is some Washington double-speak on both sides.
CHIDEYA: What's really the impact? I mean when we talk about financing, Melissa, there's been a lot of question of whether the U.S. should move toward a model more like other nations where there's more public financing, including for advertising, which is really the biggest expense in these campaigns. How does Senator Obama as well as Senator McCain's position really reflect on what we're doing as a country in terms of supporting the candidates to run a clean, fair election?
Prof. HARRIS-LACEWELL: Well I think there's two interesting things here. I mean this point is exactly right that McCain and Obama are, if they end up running against each other in the general election, are actually going to be competing for who can run the cleanest campaign. Both of them have sort of set themselves up as different from traditional partisans, you know, clearer, fairer, all of those kinds of things. So it will be fascinating to watch them throw mud about who's less clean. It will be fascinating to watch.
But I think this question of financing goes to the heart of the kind of question of, you know, our democratic politics with a little D. Will we actually be able to cultivate a leadership base that looks more like the American public, has everything to do with our campaign financing? We know that for example, the reason that women are largely shut out of office, from dog-catcher to the Senate, has everything to do with their inability to raise large amounts of money, not necessarily with their qualifications as a candidate. We know that one of the reasons that African-Americans have been largely centered in black, predominantly black districts is they find it difficult to raise the money necessary to run statewide campaigns.
When black candidates who are highly effective, do in fact get the money - people like Deval Patrick or in this case now, Barack Obama - they actually are competitive. So you know, our ability to have a more diverse and a more fair democratic political system, has everything to do with making it cheaper to run for all of these offices. And again, dogcatcher to the White House, it's not just a problem at the top.
CHIDEYA: Robert, very quickly. Do you think that more public funding is a good thing and more candidates taking it is a good thing.
Mr. TRAYNHAM: Overall I believe it is, simply because you have much more transparency. You know exactly where the money is coming from. You know exactly who is giving it. It also candidly, gives everyone an even playing field. Will we ever get there? I don't think so.
CHIDEYA: Robert and Melissa. Thanks so much.
Mr. TRAYNHAM: Thank you.
CHIDEYA: Melissa Harris-Lacewell is a professor of politics and African-American studies at Princeton and Robert Traynham is the D.C. Bureau Chief for the Comcast cable network CN8. He joined me from our NPR headquarters in Washington, D.C.
Copyright © 2008 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.