Obama's shot in the dark election offering

President Obama has to come up with something better than 1 to 2 percent of GDP growth in 2012 and better than 8.75% or higher expected unemployment in order to win re-election next year.  Expect his team to come up with something that will not be painful to taxpayers, not painful to the debt, but offers a lot of free money to a supposedly disadvantaged group that may represent a very significant, and very worried portion of the electorate, and to do so about a year from now.  This may be his best chance at re-election, but it won't be without risking significant harm to the nation.

The New Republic is extolling the virtues of the President doing a better job of bailing out struggling homeowners who got into a mess by over-leveraging themselves, with a banking industry complicit in very large part as a result of pressures put upon them by the Community Reinvestment Act.  What better opportunity for the President to win worried voters than to promise them to take care of their pain on their personal mortgage situations?

PRESIDENT OBAMA HAS belatedly recognized that his housing policies aren’t working. In a town hall meeting earlier this month, he said that housing “hasn’t bottomed out as quickly as we expected” and acknowledged that current programs are “not enough, so we’re going back to the drawing board.”

If the administration is serious about taking a fresh look at this problem, there’s no shortage of ideas to consider.

 This is setting the stage for a homeowner bailout.  But he has to do it in such a way that seems revenue neutral while helping out the significant block of potential voters who are in their own mortgage hell. The burden has to go somewhere, and the only place it can go in that situation is on the lenders.  They'll have to suck up the cost and they'll be portrayed as the villains, and everyone who is susceptible to class warfare will also be susceptible to industry warfare.

Expect an argument along the lines of - we bailed out the banks, we stimulated the economy and in both cases they sat on the money and gave out bonuses to themselves.  They need to share in the pain of this recovery we are trying to establish.

The GOP had better be ready to explain why the Democrat solutions won't work on both a national level (i.e. consequences) and more importantly to the individuals and families affected, because people will vote to ensure their own shelter, regardless of the cost to the country.  Be prepared for this to be the rabbit in the Obama hat, otherwise the illusion may work on enough people to turn the election.