Obama Wants You to Go Back to School

By Michael Ruhl, University of New Mexico – Talk Radio News Service

President Barack Obama
Photo by Michael Ruhl

Today President Barack Obama announced a new effort to stimulate tomorrow’s economy by reviving higher education through expanding Pell Grants and removing barriers to success. The public face for his new initiative is to be Dr. Jill Biden, wife of Vice-President Joe Biden and Community College Professor.

Obama’s plan, detailed at opportunity.gov, would help the unemployed go back to school to build new skill sets, with the goal of helping them gain future employment through specialized technical training.

“The idea here is to fundamentally change our approach to unemployment in this country, so that it’s no longer just a time to look for a new job, but is also a time to prepare yourself for a better job,” Obama said. “Our unemployment system should be not just a safety net, but a stepping stone to a new future.”

Among the barriers to success that the President wants to break down are state programs in which a worker might lose temporary financial support if they were to enroll in an education program. Obama said that in some places a worker may be unemployed, but may not qualify for federal assistance to get an education because of the salary they had a year ago but no longer make. The President said that he is committed to working with states to change these laws.

The President said that knowledge is the most valuable skill that one can sell. He encouraged all Americans to aim for getting at least 1 year of higher education, whether it is a community college, a four year school, vocational training or an apprenticeship.

“By 2020, America will once again have the highest proportion of college graduates in the world,” Obama said optimistically.

This announcement came on the same day as the release of April’s unemployment statistics, which saw the loss of more than half a million jobs. The unemployment rate for April was 8.9 percent, up from 8.5 percent in March and 8.1 percent in February. April's numbers have already surpassed both the White House's and the Federal Reserve's projections for all of 2009, which were 8.1 percent and 8.8 percent, respectively.

Acknowledging that unemployment is as its highest rate in 25 years, the President urged patience, reminding us that the economic problems didn’t happen overnight, and couldn’t be fixed immediately.

“We’re still in the midst of a recession that was years in the making and will be months or even years in the unmaking,” Obama said. He continued, “We should expect further job losses in the months to come.”

Obama said that the Economic Stimulus Package is yielding real results, manifest in higher consumer spending and home sales, and an increase in construction spending. He praised the Recovery Act, and said, “Because of this plan, cops are still on the beat and teachers are still in the classroom; shovels are breaking ground and cranes dot the sky; and new life has been breathed into private companies.”

Fixing the economy and reforming education are two goals Obama has set for his administration. He said that in the weeks to come he would start working towards more education initiatives.

Housing market took risks

Bush Economic Adviser Keith Hennessey said an "oversupply of houses" has contributed to the significant downturn in housing markets. He said that as long as there is an oversupply, a downturn will continue.

At a summit on housing, Hennessey said that mortgages have been "sliced and diced." Hennessey said these bad mortgages have contributed to "downside risk" in the economy, which has culminated recently in the bailout bill by Congress.

Federal Housing Administration (FHA) Commissioner Brian Montgomery said the FHA's goal for homeowners is "sustained ownership." He said the goal is not to give homes to those who financially cannot handle the costs. He called the subprime loan crisis "fool's gold" for its low initial costs followed by higher costs later.

Montgomery, who also is Assistant Secretary of Housing of the U.S. Department of Housing and Urban Development (HUD), said the goals of HUD are to "try and save the hundreds of thousands in foreclosure," and to maker sure the current housing crisis "never happens again."

HUD Director of Single Family Program Development Meg Burns talked about two programs recently enacted designed to help homeowners. She said both the "Housing and Economic Recovery Act of 2008" and the "Hope for Homeowners" rollout are designed to create fair payments for both borrowers and lenders. She said one difference between the two is that the Housing and Recovery Act is designed to help those "in a state of delinquency" due to job loss or medical problems, while Hope for Homeowners is for those "who should never have become homeowners in the first place."

Burns's advice to all homeowners who are having financial difficulties is to "call your lender."

IMF offers mixed outlook on global economy

The Brookings Institution held a discussion this afternoon regarding perspectives on the global economic landscape. The panel addressed concerns over the declining value of the dollar, rising inflation, the role of the International Monetary Fund (IMF) and what these factors mean for the future of the global economy.

According to John Lipsky, first deputy managing director of the IMF said that the Fund predicts global economic growth will drop an entire percentage point to 4 percent this upcoming year. In addition, Lipsky stated that a primary concern for the upcoming year should be increased inflation, particularly in developing economies.

Lipsky also expressed concern over the continued decline in the value of the dollar. While the United States has seen increased exports as a result of this decline, the drop has been one of the largest sustained episodes of dollar decline in the last 50 years. However, Lipsky said that despite drops in the value of the dollar, he believes it will retain its role as the dominant international currency in the long term, though perhaps sharing it with other powerful currencies like the euro.

Lipsky also predicted an economic slowdown in the EU. He said that this could potentially be more devastating than economic issues in the United States, due to a lack of coordination of financial markets within the EU.

Domenico Lombardi, nonresident senior fellow of the Brookings Institution and president of the Oxford Institute for Economic Policy expressed concern over IMF attempts to regulate currency imbalances. While the organization has been particularly useful with developing economies, Lombardi worries that highly developed nations like the U.S. may be less forthcoming with financial information, and less cooperative with policies and oversight from the Fund.

Senate Finance Committee on the real estate market

At the Senate Finance Committee on "The Real Estate Market: Building a Strong Economy," Dr. Lawrence Lindsey, President and CEO of the Lindsey Group, said there are three points to stress about the real estate market. Our problems are severe, he said, and in the last 100 years there have been the development and collapse of many different housing markets. Every time there was a new approach that worked for while, and then it would fail. Today's problems, Lindsey said, are no different.

The second point to stress is that it must be recognized this is not a "subprime" crisis but a problem that is faced by every homeowner. Because of the declines in home value, homes have become less of a liquid asset.

Third, Lindsey said, the most important thing public policy can do is to allow the development of creative solutions in the private mortgage market and avoid "one-size-fits-all" approaches.

Dr. David Seiders, Chief Economist and Senior Staff Vice President at the National Association of Home Builders (NAHB), said the United States Housing market now is in the "contraction phase" of the most pronounced housing cycle since the Great Depression. Theres is a bone fide credit crunch underway, and it appears to be worsening.

Seiders said the NAHB recommends tax policy changes to the Finance Committee, which are creating a tax credit for the purchase of a home, expanding the mortgage revenue bond program, expand the net operating loss deduction carry back, and to designate housing as an eligible investment for tax-preferred retirement accounts.

Jeffrey Schwartz, Chairman of the Board and Chief Executive of ProLogis, said that in respect to the commercial property market, there are two factors contributing to net operating income, namely effective rental and occupancy rates. The fundamental strength of commercial property markets are primarily owed to the demand for space.