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How to rescue housing?- The Obama administration doesn’t have a plan — or, more accurately, it has only half a plan. It presupposes that preventing or minimizing home foreclosures is a formula for revival. It isn’t.

Almost everyone agrees that a housing recovery is essential for a broader economic upswing, in part because housing’s collapse brought on the recession. Mortgage delinquencies triggered the financial crisis. Tumbling home prices (down 26 percent from their peak) ravaged consumer confidence, borrowing and spending. Since late 2007, housing-related jobs — carpenters, real estate agents, appraisers — have dropped by 1 million, a quarter of all lost jobs.

Housing’s distress is too much supply chasing too little demand. Huge inventories of unsold homes have depressed prices and construction. Given that prices rose too high in the “bubble” — homes were affordable only because credit was dispensed so recklessly — much of this painful adjustment was unavoidable. But that process should be mostly complete.

Here’s a little-known fact: Housing may be more affordable now than at any recent time, thanks to lower prices and falling mortgage rates (now about 5 percent). The National Association of Realtors has an “affordability index” that estimates the family income needed to buy a median-price house, assuming a 20 percent down payment and monthly mortgage payments equal to 25 percent of income. Affordability is now the highest since the index’s start in 1970.

Unfortunately, demand hasn’t followed affordability. In January, sales of new and existing homes continued prolonged declines, dropping 10.2 percent and 5.3 percent, respectively, from December. There’s a buyers’ strike. Why? Shouldn’t lower prices spur demand?

Well, yes. There are many theories as to why they haven’t. Perhaps prospective buyers can’t get loans. Or people are so gloomy that they’re afraid to buy. But the most important explanation is probably deflationary psychology. If yesterday’s $250,000 house is now $200,000, it may be $175,000 by June. Waiting is better.

Unless such deflationary psychology is broken, it becomes self-fulfilling. The more buyers wait, the more prices fall; and the more prices fall, the more buyers wait. The Obama administration essentially ignores this problem, though it can be addressed.

The simplest way is to bribe prospective buyers not to wait. For example: Give them a 10 percent tax credit, up to $15,000, on the purchase of a new home. Anyone who bought a $150,000 home would get a $15,000 tax break. The credit would expire in a year. Waiting would be costly. Buyers would delay only if they thought home prices would drop as much or more.

Precisely this proposal comes from the National Association of Home Builders. Normally, it would be an atrocious idea, because it would reward people who would buy anyway and would be skewed toward wealthier buyers. But now it’s worth trying.

Somehow, we need to cut bloated inventories (13 months of supply for unsold new homes), curb falling prices and stimulate new construction. The hope is that once buying improves, it would feed on itself. People would join from the sidelines. The NAHB says its plan would create 250,000 jobs and cost $40 billion — big money, but tiny compared with the hundreds of billions lavished on recovery programs. The Senate included the plan in its stimulus, but it was later dropped.

It wasn’t an Obama priority. Some administration proposals, focused on foreclosures, are desirable. It’s sensible to allow Fannie Mae and Freddie Mac to refinance older mortgages, at lower interest rates, even if homeowners’ equity has dropped below today’s requirement of 20 percent. This would reduce defaults and increase borrowers’ spending power.
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Other ideas seem more dubious. For $75 billion, another proposal would subsidize homeowners so their monthly mortgage payments dropped to 31 percent of their income. Because that’s still high, many of these homeowners would probably default anyway. Even worse is the “cramdown” proposal, backed by the administration. This would allow bankruptcy judges to cut mortgage payments. If passed, this would probably raise future mortgage costs because lenders would have less access to collateral.

In any case, minimizing foreclosures alone won’t revive housing. If the recession and unemployment worsen, foreclosures will increase, because people without jobs and income can’t make their monthly payments.

The best way to limit foreclosures is to promote an economic recovery by stimulating home buying. It’s true that the recent “stimulus” plan included a tax credit of up to $8,000, but that was restricted to first-time buyers and made “refundable,” meaning people could receive the money even if they didn’t owe taxes. These are younger and poorer buyers — the weak credit risks of today’s crisis. They won’t rescue housing.

All this is telling. The administration and Congress, though pledging to restore economic growth, care more about protecting foreclosure victims and promoting homeownership among the young and poor. Politics trumps economics.

Call it deflection politics.

Listen to the No. 2 Republican leader in the House, Rep. Eric Cantor. “We want to work with this president,” he said Sunday. “We want people to regain their confidence in Washington. And what people are looking for is results.”

But what of the $787 billion economic recovery legislation that not a single Republican in the House supported? That, Cantor said, was “Speaker (Nancy) Pelosi’s stimulus bill.”

Now consider White House chief of staff Rahm Emanuel. “It’s our desire that the Republicans would work with us and try to be constructive, rather than adopt the philosophy of somebody like Rush Limbaugh, who is praying for failure,” he said.

Six weeks into Obama’s presidency, both sides are trying to divine the terms for public debate. Obama and Republican lawmakers clearly understand two things: The president is popular; raw partisanship is not.

The Republican goal is to separate Obama from his policies and go after congressional Democrats, who fare much more poorly in public approval.

A convenient target
Obama, meanwhile, recognizes that part of his appeal is his outreach to Republicans, even if it’s not intended to bear immediate fruit. As a result, the White House and its allies won’t be too critical of Republican political leaders. Limbaugh, who has said he hopes Obama fails in his economic policies, makes a more attractive, and convenient, target.

This weekend, a labor-liberal coalition began airing about $100,000 in ads on national cable television and in Washington markets in an effort to handcuff the GOP to Limbaugh, whose provocations don’t always follow party script.

“Rush Limbaugh is the leader of the Republican Party — he says jump and they say how high,” said Brad Woodhouse, president of Americans United for Change, the liberal advocacy group that is sponsoring the ads with the American Federation of State, County and Municipal Employees.

Limbaugh has refused to back down. Speaking Saturday to a conservative convention in Washington, he said: “What is so strange about being honest and saying, ‘I want Barack Obama to fail if his mission is to restructure and reform this country so that capitalism and individual liberty are not its foundation? Why would I want that to succeed?’”

The words have made some Republicans flinch. And on Sunday, Cantor seemed eager to change the subject. “Nobody — no Republican, no Democrat — wants this president to fail, nor do they want this country to fail or the economy to fail,” he said on ABC’s “This Week.”

But no less a political pugilist than Emanuel drove the Limbaugh-Republican connection home.

“He is the voice and the intellectual force and energy behind the Republican Party,” Emanuel said on CBS’ “Face the Nation,” bestowing backhanded praise on Limbaugh. “And he has been upfront about what he views, and hasn’t stepped back from that, which is he hopes for failure.”

Hate-the-policy, like-the-policy-maker strategy
Republicans, meanwhile, have drawn careful distinctions between Obama and the rest of the Democratic Party.

“Republicans want to be partners with the President in finding responsible solutions to the challenges facing our nation, but thus far congressional leaders in the president’s own party have stood in the way,” said Rep. John Boehner, the House Republican leader, after Obama’s address to a joint session of Congress last week.

And Michael Steele, the chairman of the Republican National Committee, singled out Pelosi for criticism after the House approved the $410 billion spending bill. “It’s disappointing that less than 24 hours after President Barack Obama urged Congress to restore fiscal responsibility, Nancy Pelosi’s House Democrats passed a spending bill laden with pork,” he said.

Eventually, it will become harder for Republicans to continue their hate-the-policy, like-the-policy-maker strategy. Obama’s budget, with its sweeping calls for a restructured domestic policy, made clear that he was the Democrat driving the party’s ideas. And while Republicans have flattered Obama and his call for fiscal restraint, Obama aides left no doubt he will sign the spending bill and not heed their call for a veto.

“We just need to move on,” White House budget chief Peter Orszag said.

At the same time, the White House and its allies will be able to play the Limbaugh gambit only so long. After all, the talk radio master may have a big bullhorn, but it’s Republicans such as Cantor and Boehner who are driving the Republican message in the Capitol hallways.

For now, though, Limbaugh and Pelosi will do.

President Barack Obama honors musician Stevie Wonder at the White House last week.

WASHINGTON – With his short dreadlocks and crisp new suit, Shea Pierre, 16 and an aspiring pianist from outside New Orleans, looked nervous as he walked into the White House last week. Inside, the East Room had been transformed into a concert hall with colored lighting and a seat for Mr. Pierre right behind the president of the United States.

For the next 60 minutes, Mr. Pierre and 150 music lovers — industry executives, students and educators along with cabinet members and senators — rocked to the sounds of a star-studded Stevie Wonder tribute, featuring Mr. Wonder himself, who belted out “Signed, Sealed, Delivered,” the Obama campaign theme song.

The televised concert was part of an effort by President Obama and his wife, Michelle, to throw open the doors of 1600 Pennsylvania Avenue. Students, teachers, chefs, community leaders, labor organizers, mayors, governors, sports celebrities, musical icons — all have been guests of the Obamas since they moved in six weeks ago.

The burst of entertaining is giving the new White House a far livelier feel than during the twilight of the Bush administration, when more people were demonstrating outside than boogieing inside. But Mr. Obama’s open-door policy is not just fun and frivolity; it is an exercise in presidential image-making to advance his political agenda, while also carefully nurturing an identity for a first family that embodies racial history, youth and a stylistic shift in leadership.

“I think they get it, when it comes to understanding the importance of the White House, that there are no boundaries in utilizing the people’s house to enhance projects that are important to you,” said Sig Rogich, a Republican media consultant who advised Ronald Reagan. “I think it’s smart.”

When the nation’s mayors held their annual conference in Washington, Mr. Obama — aware of their critical role in spending stimulus money — invited them all in, a break with President George W. Bush’s practice of having a few in at a time. “I appreciated that,” said Mayor Pat McCrory of Charlotte, N.C., a Republican, who described Mr. Bush’s interactions with mayors as “fairly tense.”

Some, like Mayor Elaine Walker of Bowling Green, Ky., a Democrat, had never been to the White House before; afterward, Ms. Walker gushed about rubbing elbows with cabinet secretaries in the Blue Room.

“I just got my copy of Vanity Fair magazine,” she said, “and all of their pictures are there.”

When the governors were in town, the Obamas invited Earth, Wind and Fire to perform and installed a dance floor. It was a party with a purpose, said Valerie Jarrett, a senior adviser to Mr. Obama.

“It was very important to us that they all come, those who supported the recovery bill and those who didn’t,” Ms. Jarrett said. “And I think, ‘Mission accomplished.’ ”

All presidents invite elected officials, as well as ordinary people, to the White House; Mr. Bush played host to tee ball games on the South Lawn and once held his own televised White House concert, a tribute to the Marine Band. But the Obamas are using the Executive Mansion — “the world’s greatest stage,” Mr. Rogich called it — and their choice of guests to spotlight the racial and generational change they represent.

So it was that Mr. Obama, during the concert on Wednesday, credited Mr. Wonder with writing “the soundtrack of my youth” and confessed to the world that “Michelle might not have dated me” had he not been a Stevie Wonder fan. Mrs. Obama, for her part, revealed that she and the president chose one of Mr. Wonder’s songs, “You and I,” for their wedding — a tidbit that brought forth “awws” from the East Room audience.

Senior White House officials say the Obamas want to bring together people whose paths might not ordinarily cross. The White House social secretary, Desirée Rogers, said an overarching question was: “How do we Obama-tize this event?”

Shaking up traditional events
That has meant shaking up some traditional events. The upcoming St. Patrick’s Day celebration will very intentionally include people who are not of Irish descent, Ms. Jarrett said. Ms. Rogers said she was already thinking about the annual Easter egg roll and what it might “look like under this lens.”

The Obamas are also trying to capitalize on the fascination with the workings of the White House by putting the residence staff on display. Mrs. Obama changed the usual press preview for the governors’ dinner by inviting culinary students to tour the kitchen and meet the executive chef — a move that drew plaudits from Karen Hughes, who was in charge of shaping Mr. Bush’s image during his first term.

“After I saw that,” Ms. Hughes said, “I thought, ‘There are all kinds of things like that you could do.’ ”

For Black History Month, Mrs. Obama invited schoolchildren in for a performance by Sweet Honey in the Rock, an African-American a cappella ensemble. She asked retired Rear Adm. Stephen W. Rochon, the first black person to hold the job of chief White House usher, to speak.

“It was quite a surprise,” he said. “Usually we are behind the scenes.”

The Obamas’ celebrity is, of course, a huge advantage. An invitation to the Obama White House is one of the hottest tickets in town, and the intense news media attention to every aspect of the first family’s life provides new opportunities to send explicitly political messages but also more subtle social and cultural cues that aides to the president hope will enhance his reputation for inclusiveness.

For those receiving invitations, it can be quite a shock. So it was for Kyle Wedberg, interim president of the New Orleans Center for Creative Arts, who was floored when the social secretary’s office invited him to the Stevie Wonder concert. He asked if he could bring a student, which is how Mr. Pierre wound up attending.

Mr. Wedberg used his time to press Mr. Obama’s senior adviser, David Axelrod, about “the need to get some public school artists of note and promise into the White House.”

For Mr. Pierre, the son of a cosmetologist and a carpenter who spent the night of Mr. Obama’s election singing Negro spirituals in church, it was “thrilling being within arm’s length of the man.” In a stroke of what Ms. Rogers might call “Obama-tizing,” the young pianist was seated during the concert next to another president, the one who runs the Berklee College of Music, a school Mr. Pierre dreams of attending.