Zandi to Lawmakers: More Needed for Housing
The Wall Street Journal plants a wet kiss on economist Mark Zandi in today’s Real Time Economics blog.
Photo: WSJ
“If I were king for the day I might define the stimulus differently,” Mr. Zandi said. “The part of it that doesn’t really fit what I was hoping for was the spendout ratio on infrastructure. The spendout ratio is slower than expected.”
The structure of stimulus has been one of Republicans’ key complaints, and the Obama administration is supporting some changes in Senate legislation to get spending out sooner.
Mr. Zandi also recommends using the stimulus package to address the housing turmoil through tax credits. The $7,500 tax break signed into law last summer gives first-time homebuyers a credit until July 2009 that must be paid back over 15 years — effectively making it an interest-free loan. Instead, Mr. Zandi says, making it payable at the time of a home’s sale would allow it to be used for downpayments and could spur more housing activity.
A frequent expert witness at congressional hearings and omnipresent in news coverage, Mr. Zandi has become the most vocal economist arguing for a major fiscal stimulus package. The biggest risk today, he says, is “people not having clear sense of the severity of the recession.”
It’s hard not to like Zandi; he’s right a lot and he’s funny. Still, his judgment may be somewhat suspect. A Democrat, he backed and worked for Senator John McCain’s campaign.
Worse yet, he admits he bought a house in South Florida circa late 2006. “I caught the falling knife,” he said at the time. Is it any wonder Congress thinks he’s the smartest guy in the room?
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