Sen. Johnny Isakson tells Newsmax that President Barack Obama is in “full re-election mode,” but the country’s financial crisis is growing day by day and we can’t wait until after the election before there is a “day of awakening.”
The Georgia Republican, who spent three decades in the real estate industry, also says a rule proposed by the Obama administration would price 40 percent of Americans out of the housing market and stall the economic recovery.
Isakson was first elected to the Senate in 2004. Prior to that he served in the U.S. House after winning a special election in 1999 to fill the seat vacated by the resignation of Newt Gingrich.
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In a recent Op-Ed piece he wrote for the Atlanta Journal-Constitution, Isakson called attention to an Obama administration proposal he said would “seriously threaten the recovery of the American housing market.”
The proposal would require a minimum 20 percent down payment for many home purchases.
In an exclusive interview with Newsmax.TV, Isakson declares: “A 20 percent down payment would put 40 percent of the American buying public out of the housing market today.” He calls instead for “a combination of a minimum of 5 percent down plus private mortgage insurance on the top part of the loan."
“USA Today had an article last Friday where 23 percent of the American public has less than $10,000 in savings. If you’re going to require 20 percent down payment on a $100,000 house, that’s $20,000 — out of the reach of 23 percent of Americans. The housing market would be out of reach of 40 percent of the public.”
He says there’s “no question” but that the rule would prolong the downturn in the housing market, adding, “Over-dominant down payments or underwriting procedures would just stall the recovery.
“Home ownership is $2 trillion of our $15 trillion GDP in terms of construction, jobs, purchases for draperies, carpeting, etc. It’s a very important part of the economy and you have had a reduction from 69 percent home ownership to 65 percent. That’s a pall on economic recovery.”
Asked if measures from the administration and Congress aimed at keeping families in their homes are working, Isakson responds: “They’ve had some modest success. Quite frankly though, most of the loans that were restructured and recast went back into default within six months of being recast primarily because they were difficult loans to begin with. They were made to borrowers who really weren’t as well qualified as they should have been.
“We’ve got to let those wash away through the system before we can really put a floor under housing and begin to build back up in terms of equity.”
Turning to the economy in general, Isakson says of various budget reform proposals: “I like the ones that start focusing on reducing the deficit and the debt over time, getting our arms around spending.
“Spending is a part of the problem. It’s not all the problem. We’re going to have to reform entitlements, reform our tax code. This is an all-hands-on-deck job we have to do to reduce our deficit over time and reduce our debt.”
House Speaker John Boehner has called for something “big” to be enacted before the election. Asked if it’s realistic to think anything substantial can be accomplished before the November vote, Isakson responds: “Necessity is the mother of invention, and people are talking a pretty good game now about putting everything off. But our crisis is growing day by day, in terms of increased national debt and borrowing from the Chinese or our own Treasury having to buy our debt because nobody else will.
“The sooner we start meaningful cuts, the better off we are. I hope Speaker Boehner is right and the day of awakening is coming, and I hope it happens soon.”
Isakson also says Congress should try to do something “big” to solve the nation’s economic woes rather than a more “realistic” approach of taking a series of smaller steps.
“It has to be big for one reason: That is it’s an all-encompassing problem and there’s not one place where the solution lies,” he tells Newsmax.
“If you take it piece by piece you run the risk of not getting the job done. You really have to look at entitlements and taxes and spending all together. They all interrelate.
“I think there’s a growing consensus that doing nothing makes no sense at all. It’s a shirking of our responsibility, and we all know eventually the solution has to be bipartisan.”
He also refers to Boehner’s declaration that the nation’s debt ceiling should not be raised unless the increase is offset by spending cuts. “The debt ceiling increase to $16 trillion puts us in negative net worth as far as the country is concerned, and the amount of the debt is growing at an exponentially compounding rate, so it’s a warning signal. And I think Speaker Boehner is exactly right to use that has a benchmark to force us to come together and try to do something big.”
Isakson says a new bipartisan proposal put forth by senators including Republican Marco Rubio and Democrat Mark Warner, aimed at jump-starting the economy through the creation of new businesses and jobs, indicates that Congress is recognizing the urgency of taking bipartisan action on the economy without waiting for the White House to take a lead role.
“In the Senate it takes 60 votes to do anything and neither party has 60 votes,” he says. “It’s going to take a combination of both parties to come together. I think you’re seeing a bipartisan approach because we all realize that’s the necessity.
“Obama is in full re-election mode every day and you have to recognize that’s not a good platform for negotiation. A good platform for negotiation is when we realize we’re all Americans first. It’s our children and grandchildren’s future.
“The president has attempted to blame a lot of people for the problems we have, but we’re all in this together. It’s really time all of us focused on the problem, not what’s happened in the past but what we can do in the future to solve the problems.
“I hope he’ll come to the table. I hope he’ll be in a bipartisan position. I hope he’ll do what he did in the 2010 lame duck session. He actually surprised the Congress by making some proposals I did not expect him to make, like extending the Bush tax breaks.
“It will be interesting to see what hand the president decides to play.”
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