Democrats clamor for housing aid

WASHINGTON — As the economic downturn deepens, congressional Democrats are turning up the heat on the White House and Republicans in Congress to respond more aggressively to the mortgage crisis when lawmakers return next week from their spring recess.

Senate Majority Leader Harry Reid (D-Nev.) indicated Friday that he would bring a housing assistance package back to the floor Tuesday even though Republicans previously blocked it.

And Sen. Charles E. Schumer (D-N.Y.), chairman of the Joint Economic Committee, called on President Bush to intercede with Republicans in Congress.

“At the center of this crisis is housing -- that’s at the bull’s-eye -- and yet still the administration refuses to step up to the plate and do what’s needed,” Schumer said in a conference call with reporters.

He accused Republicans of taking a “Herbert Hoover-like attitude of do nothing, twiddle your thumbs while the economy gets worse.”

The president gave no indication Friday that he intended to support additional federal intervention to help homeowners.

In a short visit to a nonprofit mortgage counseling center in Freehold, N.J., he praised the private-sector initiative running the operation.

“A lot of families are facing the frightening prospect of foreclosures,” Bush said. “Foreclosures obviously place a terrible burden on a family, as well as they lead to losses for lenders and investors.

“And this affects our entire economy.”

Democrats said that the voluntary, private-sector initiatives emphasized by the administration were inadequate to cope with the scale of the housing crisis.

“Today was a nice photo-op for the president, but touting the baby steps the administration has taken in the face of this tsunami of foreclosures cannot be mistaken for the type of bold action American homeowners need,” said Sen. Robert Menendez (D-N.J.).

In this election year, congressional Democrats, who have majorities in both houses, are eager to show that they are responding to what has become voters’ top concern: the economy.

In a letter Friday, Reid urged Senate Minority Leader Mitch McConnell (R-Ky.) not to block the housing bill, arguing that Republicans had shown more interest in the fate of banks and investment houses than the plight of ordinary people.

“Much of the federal government’s responses to the housing crisis to date have addressed the problems confronting our nation’s financial markets,” Reid wrote.

“While those actions have been helpful in many instances, Senate Democrats believe we can further help our economy and our communities by paying equal attention to families facing similarly dire circumstances.”

It remains to be seen whether Democrats and Republicans will be able to agree on much, especially with the nation’s political energy increasingly focused on the presidential election.

But heightened anxiety among Americans is likely to give momentum to some measures.

After Congress addresses Reid’s housing bill, it will probably turn to a rescue plan by House Financial Services Committee Chairman Barney Frank (D-Mass.).

The plan would permit the Federal Housing Administration to provide guarantees that would underwrite $300 billion in refinanced mortgages.

Democrats are also trying to put together a second economic stimulus package that would include federal spending on unemployment benefits, food stamps and infrastructure projects in an effort to forestall a recession.

And while they work on legislation, they will also be questioning federal officials about the administration’s actions so far.

First up is Federal Reserve Chairman Ben S. Bernanke, who is scheduled to testify Wednesday about the state of the economy and the administration-facilitated rescue of troubled brokerage Bear Stearns Cos.

“Since this is an election year, and key economic indicators like unemployment will look much worse in the coming weeks, Congress will be looking for someone to blame,” said Gregory R. Valliere, chief political strategist for the financial services firm Stanford Group Co. “The Bear Stearns bailout comes with an implied quid pro quo. If you bail out big investment banks, what about individuals facing foreclosure? It’s a very potent populist argument, and what politician wants to be on the wrong side of that debate?”

There is likely to be heated argument over efforts to increase government regulation and spending.

On Monday, Treasury Secretary Henry M. Paulson Jr. is to detail an overhaul and streamlining of the nation’s financial regulatory system.

Senate Democrats plan to try again next week to pass Reid’s foreclosure prevention bill.

But Republicans remain opposed to a provision that would allow bankruptcy judges to modify mortgages to help homeowners avoid foreclosure, saying it would lead mortgage companies to raise interest rates.

“What the economy doesn’t need is to raise the price of homeownership by enacting the ‘cram-down’ provision contained in the Democrat proposal,” said Don Stewart, McConnell’s spokesman. “This is a particularly ill-advised idea.”

The White House, in a veto threat issued last month, opposed the provision. It also opposed a provision that would make available $4 billion to redevelop abandoned and foreclosed homes, calling it a “bailout for lenders and speculators.”

In the meantime, interest groups are stepping up their lobbying.

The National Assn. of Home Builders, for example, is pushing for a home-buyer tax credit.

“We are hopeful that Congress will recognize the need for a second economic stimulus package,” said the group’s chief executive, Jerry M. Howard, who said it appeared that the stimulus package approved earlier this year was “not enough to forestall a continued downturn.”

Although both parties are expected to highlight their differences, Howard said he was still hopeful that lawmakers would eventually come together to pass legislation.

“There’s a time for partisanship and a time for electioneering, but it shouldn’t be done at the expense of the American economy,” he said.

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