Committee introduces legislation on credit card regulation at press conference

Senator Christopher Dodd (D-CT), chairman of the Senate Committee on Banking, Housing, and Urban Affairs, introduced legislation to improve credit card billing, marketing and disclosure regulations and practices today at a press conference. The Credit Card Accountability, Responsibility, and Disclosure Act (C.A.R.D.), is set to strengthen industry regulation and supervision, prevent increases in interest rates and terms, and prohibit exorbitant and unnecessary rates and fees, among other things.

Upon becoming chairman, Dodd put credit card companies “on notice” in 2007 and with this legislation is hoping to create “fairness and transparency for consumers.” Last year 700 million credit cards were given out that allocated about $9,000 of debt per household, due to, as Dodd said,“mostly excessive fees and exorbitant interest rates.”

Sen. Carl Levin (D-MI), at the press conference in support of Dodd’s legislation, noted “With all the economic hardships facing folks today, from falling home prices to rising gasoline and food costs, it is more important than ever for Congress to act now to stop credit card abuses and protect American families from unfair credit cared practices.”

House Committee on Ways and Means investigates clearing the disability backlog

The House Committee on Ways and Means held a hearing today to investigate why Social Security distribution backlogs are at an all time high. Wait times for people in need to receive money range from 500 to over 700 days, with districts in urban communities like Atlanta and Milwaukee being among those with the longest waits.



The Committee questioned Commissioner of the Social Security Administration Michael Astrue about the progress his staff has had in solving the backlog problem. Astrue explained that his group was succeeding in making progress to help individuals in need of receiving their social security benefits, but that his program was vastly under-funded. Commissioner Astrue emphasized the importance of having more, better allocated money for hiring staffers and making the money distribution process run faster and more effectively.



Committee Chairman Charles Rangel (D-NY) told Astrue that the issue of providing social security and helping Americans is one that is “neither Republican nor Democrat.” His sentiments were backed by members like Jim McDermott (D-WA) who said that the current murky backlog situation is “lose lose” for everybody involved.

IMF economists address the housing crisis

At a discussion on the Housing Crisis and Lessons for Monetary Policy at the Brookings Institute today, International Monetary Fund Economic Counselor and Director Simon Johnson predicted a “mild contraction” in the U.S. economy this year followed by a “relatively slow recovery” next year. Johnson discussed the link between housing and mortgage finance and said that the link between monetary policy and housing is stronger because of recent governmental intervention in the current crisis.

IMF Senior Economist Roberto Cardarelli said that over the last four quarters, residential investment has contributed 56% to the decline in U.S. GDP, “and by that standard, we are very much in a recession environment in the United States.” Cardarelli said another cause for concern is the impact of housing prices on the decline in consumption, which further stunts economic growth. He also emphasized that inflation rates need to change in order to stabilize inflation and minimize loss.

The long, darn tunnel of recession

By Ellen Ratner

It's been a long time since Capitol Hill politics starting looking a lot like they used to: Personal animus is out and deal-making, pork and problem solving are back in fashion. That's the way it should be – our country currently faces some major problems that, for once, aren't the creation of some candidate's oppo research department.

America is looking down the long, dark tunnel of recession, or possibly worse. Rumors abound about deal-making on the Colombia Free Trade Agreement, and of even greater importance to more Americans, a second stimulus package. Bush and his fellow corporate cowboys want the Colombia Free Trade Agreement, and the Democrats are eager to take care of their own, which are the folks most likely to be hurt in the current blizzard of bad economic news. House Speaker Pelosi managed to shrewdly kill the Colombia deal, but not because she dislikes either Colombia or free trade. Rather, it gives her something to swap with the Republican corporate cowboys in exchange for advancing part of the Democratic economic agenda.

These days things move at warp speed, and economic woes are no exception. The Democrats agreed with the first stimulus package; this time, the checks really are in the mail. But in the meantime, everything made out of or from petroleum has soared even higher, and it's an open question whether we'll spend our $600 windfall on gasoline, fuel oil, credit cards or mortgage payments. One thing is certain: $600 don't buy what it used to (starting from a month ago), and they surely aren't going to ease the pain as the promised blizzard of bad news turns pink from all those slips telling Joe and Sally, "You're Fired!" In short, if things were doing any better, the economy would only be terrible.

Last Thursday, several U.S. senators gathered with union leaders to figure out a second stimulus package. This was down and dirty – up for discussion were tax rebates, an increase of food stamps and adding more time to unemployment insurance eligibility. (Welfare reform was a great idea when the economy was booming; we'll see how many reformers are left if unemployment increases to 7 or 8 percent.)

Of all the proposals served up, extending unemployment benefits would likely help more people more effectively. The Joint Economic Committee's Democratic staff members agree, and they point to history: During the last two economic troughs into which the nation tumbled (1991 and 2001), Congress approved and a Republican president agreed to extensions of employment benefits. This is almost a bipartisan response to employment crises, and the only arguments usually revolve around how long to extend and how much to increase benefits.



Consider this: By this June, an estimated 1.3 million Americans will have exhausted their unemployment benefits, and this with a recession likely to be just beginning. People will find it tougher to get a job. And economists figure that nothing stimulates the economy or stitches the social safety net tighter than in providing adequate unemployment benefits.

Naturally, Bush is stalling. He argues that it's too soon for a second stimulus package because the first one needs time to work. Just as he was too slow to react to changes in Iraq, Bush is too slow on the economy – things are simply changing faster than his ability to convincingly procrastinate or argue that we should wait and see. In short, events are overtaking reaction time. There must be help before the job market turns ugly. There must also be more targeted help – and unemployment insurance does the trick.

The more one scratches the surface here, the more dangerous things appear. While the official unemployment rate remains low, the employment rate (those who actually have jobs) is lower than during the recession of 2001. That year 32 percent of people took the full amount of unemployment insurance. But now, even before we've officially entered a recession, 36 percent of those on unemployment have already exhausted their benefits. Today, many economists consider the employment rate a better indicator of job health than the unemployment rate. Hard to believe, but unless something is done soon, and if a recession takes hold, the American public may once again be facing the prospect of bread lines and soup kitchens.

More reliable and frequent data now allow analysts to understand the concept of "employment" far better than in former downturns. For example, "work" can mean full-time employment or a mere part-time job. Many unemployed people will take part-time jobs as a way to put food on the table; they may count as "working," but part-time doesn't pay the rent, mortgage or car payment. One fifth of today's part-time workers say they took their jobs because they could not find full-time jobs. In fact, the Department of Labor admits that the unemployment rate would be a whopping 9.1 percent if it included people who were marginally or part-time employed or those who needed and wanted to be fully employed.

The public should not be fooled. When government officials bloviate about the economy's overall health, look behind the numbers. There is a far greater crisis with employment than the gross numbers suggest and that the corporate cowboys would like to admit.

In the end, even die-hard Republicans come around to support increasing the length and amount of unemployment insurance. During past recessions, extending unemployment benefit eligibility had a direct effect on the GDP: For every dollar of paid benefits, demand was stimulated by $1.64.

I say let Pelosi play her political games. If that's what it takes to extract another stimulus package from the Republicans, so be it. In this political game, for once, the winner will be the American people.

Conference Call compares House and Senate housing relief tax packages

The Center on Budget and Policy Priorities held a conference call today to compare the House and Senate housing relief tax packages. Call participants voiced their concerns about the lack of success both chambers of Congress have had to date in helping families decimated by the crisis concerning housing foreclosures and subprime mortgage rates.

Call participants discussed how the packages Congress has implemented to address the growing rate of housing foreclosures facing Americans “don’t meet the needs” of families seeking government aid. The discussion also focused on the importance of providing struggling families with tax credit, something the Senate bill does not address. Policy analyst Aviva Aron-Dine discussed how there are too many provisions that the relief package bills include (particularly the Senate version) that do not have anything to do with the housing crisis. Call participants explained that tax cuts the bills include for the wealthy are of no assistance to the poor who do not benefit from them.

Aron-Dine described the Senate bill as “extremely disappointing” and noted that while the House version is better, it still does not go far enough toward helping families in dire need of governmental aid. Aron-Dine explained that 60% of the Senate bill has nothing to do with helping solve the foreclosure problem. Call hosts also interestingly noted that forclosures destroy community life as well as family life, and that people renting homes have been affected by the crisis as well.