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Erskine Bowles, a former chief of staff under President Clinton, and Alan Simpson, former senator from Wyoming, say the U.S. Supercommittee members should remember that their personal priorities and the common good are not at odds. The authors of the Bowles-Simpson Presidents Commission for deficit reduction say there is growing discontent among voters with politicians who are obsessed with gaining partisan advantage. Using issues of national importance that require a common approach from all parties as a way to score political points will only backfire on these politicians. Personal priorities of members of Congress are now no longer at odds with the common good, they are converging. It is upto the Congress, members of both parties, to push back against the special interests and partisan politics, and show leadership on the deficit. The eurozone crisis has shown the dire consequences of any sluggishness or procrastination. The failure of the political class and leadership in Italy and Greece, and in other nations of the EU, has put the fate of these countries in the hands of markets, which have relentlessly pushed up the borrowing rates of Greece, Italy, Spain and other countries, and taken future direction out of the hands of politicians. Erskine and Bowles say don't wait for a fiscal crisis to take action because it will be disastrous economically and politically, with everyone as losers and no winners. Timidity is not an option, leadership is required to take action that is big and broad, tackling tax expenditures, entitlement expenditures, defense, across the board....

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The median net worth of Hispanic and Black families has been severely affected by the recession. Because minorities hold a much larger part of their assets in household equity the foreclosure crisis and the recession have had a devastaing impact on both minority groups. The median net worth of Hispanic families dropped by two thirds and black families by half after the 2008 recession from the 2005 figures, and was around $6000 for 2009 for both groups, according to data from the Pew Research Center. The Pew report shows median net worth of a white family is 20 times that of a black family, and 18 times that of a Hispanic family, with the gap between these minorities and whites twice as large in 2009 compared to the period before the recession in 2005. This was even true for Asian American families, whose median net worth dropped by half from 2005 to 2009, to $78,000. The figure for whites dropped much less from $135,000 to $113,000 during the same period. Another significant finding is that within each group the share of the wealthiest 10% of the people increased between 2005 and 2009, for all households this went up from 49% to 56%, for Hispanics from 56% to 72%, for Blacks from 59% to 67%....

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Critics of the Obama administration's so-called "light footprint strategy" for the Middle East say it is more about keeping distance from problems in that region. This is a reaction to the extensive involvement of the U.S. in two wars in that region and intuitively makes sense, as well as being in line with American public opinion to focus on problems at home. The shift or pivot to Asia of president Obama also comes in that context. The problem with this approach is that this ignores the fact that most of the momentum and effort for the freedom struggles throughout the Middle East from Tunisia first, then Libya, Egypt, and now Syria, comes from within. The lead role is now being taken by France and Britain, with German public opinion also lined up in support. The U.S. in forfeiting its role as a facilitator with strategies such as "no-fly-zones" is losing the opportunity to gain the goodwill in the Middle East with cost that is negligible in comparison to the cost of Iraq and Afghanistan, and comes after the huge U.S. effort to remove one dictator in Iraq. A minor followup effort is all that is required from an administration that pushed for the "surge" in Afghanistan. When history is written the investment of the Obama administration in Afghanistan may show little results, if what is considered by the media and experts as an unpopular and undemocratic government of Karzai falls in the aftermath of the U.S. withdrawal. There is little doubt in public opinion in the U.S. and worldwide that the movement for freedom and democracy in the Middle East and democratically elected governments will become a lasting facet of the new Middle East. It also provides huge opportunties for trade and investment as is shown by the gains made by Turkey in just 2 years. This is why the Obama adminstration policies in the Middle East show a lack of grasp of the facts showing the Middle East as opportunity more than threat for the next decade, especially in its overreaction to the Bush era policies. This happens as there is a demographic explosion of young people in the Middle East. An administration that was keen to sense the demographic changes in North America, has failed to grasp this fact and why the struggle in the Middle East flashes daily on television screens young people carrying on the struggle. A pivot to Asia means a pivot to the Far East more than Asia because India is part of the South Asian-Middle Eastern region, which presents another paradox because as China is slowing the entire South Asian-Middle Eastern region of Asia is where future growth is expected to accelerate in the next decade. ...

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Former U.S. president Bush says the U.S. has an important role as a beacon of freedom, human rights and democracy in the world. The U.S. should not shrink from the challenges in the name of a false and temporary stability, and flexibility should not mean ambiguity, difficulties should not mean shrugging away from America's role. Patience, creativity and active American leadership are needed. The Bush administration supported the struggles of people in central Europe and in other countries. This is from a speech Bush gave at the Bush Institute, Southern Methodist University in Dallas, a year into the Arab Spring. A speech that was giving voice to the aspirations of people in the Arab world.

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Prof. Peterson of Harvard and Hanushek of the Hoover Institution, authors with Woessmann of the book "Endangering Prosperity: A Global View of the American School," offer some startling reminders about the importance of education to economic growth and incomes in countries. Simply by raising the math standards in the U.S. to the higher standards in Canada would raise GDP by three fourths of one percentage point. One advantage that the U.S. enjoys comes from its good university systems, open markets, rule of law, tax rates, and open immigration policies, which give it about two thirds of a percentage point in higher GDP growth per year. The estimates are from the authors calculations. For the period 1960-2009, a period of rapid growth in Asian countries Korea, Taiwan, Singapore and Hong Kong, higher test scores in math and reading compared to the wrold average as measured by NAEP test and PISA, have led to 2% higher GDP growth. NAEP shows only 32% of U.S. high school students proficient in math compared to 45% in Germany and 49% in Canada and 63% in Singapore. By contrast to Korea and Taiwan, Peru, Argentina, the Philippines and S. Africa have about 2% less in GDP growth because of lower scores compared to the world average....

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About 680,000 homeowners applied for the Home Affordability Modification Program, or HAMP, and had their loans modified so that their mortgage payments are reduced. This is only one in four of the 2.7 millon homeowners who tried to to join the program. This according to a Wall Street Journal analysis of data released by the Treasury Department. In 2009 the Obama administration launched the program to reverse the rising home foreclosures in the U.S., by reducing the monthly mortgage payments through lower interest rates and extending the term of loans. About $75 billion was estimated as the cost of the program at the time. Only $1 billion of this has been spent by the Obama administration. The program offered payments to 100 mortgage servicers as inducement to complete loan modifications. About half the applicants or 1.3 million were declared ineligible from the beginning, and the program used stricter qualification criteria than loan modification programs offered by individual banks. Applicants were rejected because the necessary paperwork was not submitted or it was lost by the mortgage company- 266,000 falling in this category. An additional 770,000 homeowners who started the program were later disqualified mostly for the paperwork and eligibility problems, with only a small number rejected for failing to make trial payments. Mortgages less than 31% of pretax income were considered affordable and considered ineligible-255,000 were in this category. Over 80% of homeowners in the southern states of Arkansas, Louisiana, Oklahoma, Texas, Alabama, Kentucky, Mississippi, and Tennessee, received no loan modification....

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Drew Western, a professor of psychology at Emory University, asks the question about Obama that is on many people's minds- who is this man who wrote the book "Dreams of My Father." And what happened to him? It is as if he is asking did they conjure up something that didn't exist, was there really too little about the man in a book written when the young Obama was still in law school- about his experience growing up between two races, except a remarkable effort to grapple with that experience. It would say little about the man himself, the choices he would make, the decisions he would face as he entered his thirties, and forties, a period that provides the crucible and the formative experiences in the development of character. It is as if readers had appended their own chapter at the end of the book and conjured up many things that really did not exist. And which would serve as a kind of Rorschach test experience where readers were free to read into the picture whatever they wished to see- and something Obama could use to be all things to all people. Drew Western draws from his knowledge of psychology and his direct or virtual conversations with about 50,000 people to reflect and make some hypotheses about what has happened to Obama, or what Obama was always about. He starts by pointing out what was missing in the inauguration speech and has been missing ever since- a clear sense of narrative and a vision, a story about what had happened and how it could be made different in the midst of the global financial crisis of 2008-2009. Western provides several hypotheses for what has happened. Obama simply lacks the experience to handle the presidency -having been merely a community activist and not run a city, a state or a business, and had accomplished little before becoming president, and had an unremarkable career as a law professor having published nothing during his 12 years at the University of Chicago except an autobiography. And remarkably says Western voted 130 times in the Senate as "present" instead of "yea" or "nay," suggesting a tendency not to take a stand on difficult issues. The auto fuel efficiency standards issue may be the singular exception. The challenges of a presidency are much larger, and the challenges in 2009 were even greater. Obama could not measure upto the task. A related hypothesis is that given the lack of experience and the inability to make the narrative because of an unresolved identity, Obama is willing to do whatever it takes to dial for dollars and get re-elected. ...

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Joe Nocera of the New York Times, says that it is the Attorney Generals of the 50 states in the USA, that have taken up the rights of homeowners, not the federal authorites. He points out that the Obama administration, the Treasury department and the federal agencies, have failed miserably in getting the banks and servicers to take loan modification seriously. It was the attorney generals of the states that were with homeowners from the beginning, to prevent predatory lending and outright fraud. Until they were stopped by federal bank regulators, who sided with the banks in court. The subprime lending crisis might never have ocurred, says Nocera, had the states not been obstructed in this way. As the subprime lending mounted, the state AG's were talking to people in their communities, and knew the reality on the ground. The Office of the Comptroller of the Currency and the Office of Thrift Supervision, two primary regulators of the banking industry, saw their role as protecting banks from consumers rather than protecting consumers. Professor Prentiss Cox, of the University of Minnesota Law School, who was an assistant attorney general in Minnesota in charge of consumer enforcement, says federal regulators should have been listening to us, instead of trying to shut us down....

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Applebaum describes how Obama as president took action on the stimulus after the 2008 financial crisis, but did not take the necessary action to stem foreclosures and aid a recovery in housing. This now appears to be one of the critical failures of his presidency.

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The skills to navigate different personalities and work patiently on the issues surrounding changes to the U.S. tax system of Rep. Dave Camp (MI), chairman of the U.S House of Representatives Ways and Means Committee, will be immensely useful in the effort to make changes to the U.S. tax system. Camp works well with fellow House Republican leaders Boehner, Ryan, Cantor, and his Democratic counterpart in the U.S. Senate Max Baucus. Camp is a good listener, refuses to engage in partisan criticism, and has the patience to work through difficult issues of achieving savings and keeping fairness in the the tax changes. Earlier efforts to achieve consensus in late 2011 failed, making it even more important to have leadership which can create productive debate and bridge the differences. The tax changes are part of the overall effort for U.S. economic recovery by reducing the deficit.

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Applebaum talks to two researchers at the University of Chicago and Princeton, Prof. Sufi and Prof. Mian, on the record of U.S. president Obama and Fed chairman Bernanke in helping homeowners facing foreclosure and underwater borrowers, comparing that record with their record in helping the banks. The issue is relevant as the policy and handling of homeowners had to be part of an overall effective plan for recovery in the U.S. economy, because ultimately without the U.S. consumer any recovery would be weak in the long run- a situation the U.S. faces in early 2014. The response to the issue of irresponsible homeowners borrowing beyond the limit without an equally robust response to irresponsible bank management that allowed wildly excessive leveraging of assets, and successful aggressive lobbying by banks in a shortsighted policy of going through with a wave of foreclosures; besides creating questions of fairness and equitable handling of the problem, also had major ramifications for the future of the U.S. and global economic growth. Here Christina Romer and other administration advisors say Bernanke was right in tackling the problem from the perspective of the banks needing to be recapitalized. Thoughtful advisors looking at the entire problem, Martin Feldstein and Sheila Bair strongly pushed for providing the same help to homeowners without getting caught up in the issue of who was responsible home buyers or the banks, and looking at the interests of the U.S. economy and the U.S. people. Proposals by Feldstein and Bair were equally robust in helping banks as they were in helping homeowners, only the banks understood their interests narrowly and had more access to policymakers in the Bush, as well as the Obama administration, Paulson as well as Geithner. This leaves us with the ultimate irony of the Obama administration pushing for the minimum wage, even to the point of electoral posture, when lasting damage had been inflicted on homeowners from the weaker portions of America's middle class by a policy that went against what two respected financial and economic experts from the Reagan period, Sheila and Bair had strongly advocated. See links and groups on Feldstein and Bair. Applebaum has followed most aspects of this problem closely and continues to provide exceptional reporting including the piece on the thinking of new Fed chairman, Janet Yellen. Private enterprise rules that require management at banks just as for other companies to take responsibility for failures, and be replaced with new management, was largely avoided leading to a fundamental failure in how a free market economy such as the U.S. and western European economies are supposed to function. Rules aggressively pushed by Geithner's mentor Treasury Secretary Rubin for a vigorous cleanup at banks in South Korea during a similiar situation in 1997, were not followed in any way here, also setting wrong precedents for the long run. ...

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Edward DeMarco is head of the Federal Housing Finance Agency (FHFA), which is the independent regulatory agency overseeing U.S. housing lenders Fannie Mae and Freddie Mac. The FHFA was formed in 2008 after merging two existing agencies. Later that year Fannie and Freddie were taken over by the government. FHFA head, DeMarco, is reluctant to help homeowners with underwater mortgages on their homes with reduced payments because this would mean losses to the taxpayer. He sees his mandate as protecting the taxpayer. Sheila Bair, former head of the FDIC, says she understands DeMarco's mandate is not to provide fiscal stimulus, and the Obama administration has been all over the place when it comes to providing homeowner assistance. The result is that there is little help by the U.S. government to homeowners with underwater mortgages since 2008, and this creates larger headwinds for the Federal Reserve Bank to provide momentum to the U.S. economy. Many experts see this as a serious problem and a well respected economist, Martin Feldstein, has made repeated proposals for structuring the help to homeowners since 2008. ...

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Frederick Harris of Columbia University says there is a price to be paid for a black president and it may just be too much for the average black person. There is a difference betwen symbols and substance, betwen a role model and accountability in a representative democracy, which is sadly lacking when the black elites, clergy and politicians fail to debate the issues about the problems facing the black community. Problems related to the increasing poverty among black Americans, and the 14% unemployment for black people. There is he says a strange reticience among the black elite to hold the president accountable on these issues just as they would have done for any Democratic president, even one who was as popular with blacks as Mr. Clinton. He says the experience with Obama is not even remotely comparable to the transformative nature of the work of Rev. Martin Luther King in the black community. It may stem from Obama's multiracial background, growing up in many countries, his elite education and being part of a liberal elite more than of the black community. The price is too high in economic and social terms for the poor or average black person and it has created a divide between the average black person and the black elite, with different concerns and different priorities. Harris points out that poor and poverty are words not mentioned often by Obama. Related to this is the foreclosure crisis in which ordinary black people were hardest hit with no effective help from the president to homeowners badly needing relief. Sheila Bair of the FDIC and Martin Feldstein advocated aggressive help for homeowners under water which did not come from the president. Showing not just the limits of a black presidency, but false hopes, inexperience and lack of leadership in issues that mattered to all Americans in the housing and foreclosure crisis. A populist from Kansas, as Sheila Bair describes herself, had the right instincts and courage of convictions which the president lacked and the entire country needed....

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Galston cites a Federal Reserve Board of Chicago 2014 study showing setbacks for black people in achieving improvement in income status. Even for children born into middle income black families about 55% are expected to fall below middle income status compared to 36% for children of white middle income families. The problem is not just the gap as Galston points out but what it says for the declining income mobility for the white middle class when 36% are likely to see declining status and prospect for the future, and 23% will see no improvement. Overall it shows a lack of income and social mobility for whites and minorities alike compared to the past improvements since the 1960's, not a bright prospect and less hope for the future the way things are, and why so many of the establishment candidates and existing policies are being questioned by voters.

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Rep. Dave Camp, House Ways and Means Committee chairman, representing northern Michigan, says every deduction in the tax code is there because of a reason, and powerful lobbies will oppose any changes. The best he can do is work himself out of this job as he will have to tackle the Democrats on entitlements, the business lobbies on tax loopholes, and other lobbies protecting their preferences in the tax code. He plans to achieve a simpler tax code with lowered rates of 25% for business and earners above six figures, and 10% for everyone else. The approach he is taking is to be revenue neutral when tackling tax reform, in the belief that the economic growth generated from a simpler tax code and lower rates would generate revenues of 18 to 19% of GDP, up from about 16% today. He says the economc cost of not getting this done to get the economy rolling again is so high that he is upbeat that both sides can come together after the election no matter who wins. He is also looking at a repatriation tax of 5% on profits kept by American companies overseas, which would boost revenues for business which could be reinvested in stead of sitting idle. Today the much steeper tax rate on repatriation makes businesses reluctant to bring it back....

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WSJ reporters Corkery and Yoon give a remarkable account of the individual homeowners and investors inside one toxic subprime mortgage security from Countrywide Financial Corp. named CWABS- 2006-2007. There is Amanda Gavini of Fort Myers who continued making mortgage payments against the odds after a illness and death in the family. And a couple Donald Mudd- Patricia Starr who were approved by Countrywide for a $171,000 adjustable rate mortgage loan at 8% with a $10,000 down payment for a home in Port Charlotte, Florida. The approval came only 3 months after the couple emerged from personal bankruptcy in 2006, and by 2009 Mudd was missing payments. Other borrowers such as Mrs. Gavini in Florida took out two loans at 7% and 11% in 2006, have continued making payments and are still unable to refinance under the HAMP or HARP government programs. It is because of these homeowners who continue to make payments helping the security price recover, that one of PIMCO's funds which owns a stake in this security has made good returns. Hedge fund Marathon Asset has also made good returns on this security because of the U.S. government's Public Private Investment Program to help banks recover by providing government incentives for purchase of these securities from banks. This was a way to get banks holding these subprime securities to resume normal lending in financial markets....

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The home ownership rate for the U.S. in March 2012, is 65.4%, the same rate as in 1997 before the housing bubble, according to the U.S. Census Bureau. The irony of this is that the housing bubble was inflated by politicians in Congress and mortgage lenders and purchasers of mortgage securities. Fannie Mae and Countryside worked together ostensibly to promote home ownership while pursuing profits. In the case of politicians they pursued goals of raising employment and growth without understanding the risks of artificially inflating home ownership, and without consideration for incomes of subprime borrowers. A less benign view of the interests and goals of politicians comes from reflections on the impact of political lobbying by Fannie Mae and other housing lenders in the U.S. Congress. The consequences in terms of foreclosures have been devastating for minorities as well as other middle class homeowners. It has also damaged the U.S. banking system, credit growth in the economy and prospects for recovery, which will take years to correct. The federal government is also saddled with large losses at Fannie Mae because of its quasi government agency role. That role led to inflation of the bubble. Most of the consequences will be borne by middle and lower income households in the U.S. The pass-through effects in a global economy affect Europe, and emerging market countries. ...