Bush Economic Adviser Keith Hennessey said an “oversupply of houses” has contributed to the significant downturn in housing markets. He said that as long as there is an oversupply, a downturn will continue.

At a summit on housing, Hennessey said that mortgages have been “sliced and diced.” Hennessey said these bad mortgages have contributed to “downside risk” in the economy, which has culminated recently in the bailout bill by Congress.

Federal Housing Administration (FHA) Commissioner Brian Montgomery said the FHA’s goal for homeowners is “sustained ownership.” He said the goal is not to give homes to those who financially cannot handle the costs. He called the subprime loan crisis “fool’s gold” for its low initial costs followed by higher costs later.

Montgomery, who also is Assistant Secretary of Housing of the U.S. Department of Housing and Urban Development (HUD), said the goals of HUD are to “try and save the hundreds of thousands in foreclosure,” and to maker sure the current housing crisis “never happens again.”

HUD Director of Single Family Program Development Meg Burns talked about two programs recently enacted designed to help homeowners. She said both the “Housing and Economic Recovery Act of 2008″ and the “Hope for Homeowners” rollout are designed to create fair payments for both borrowers and lenders. She said one difference between the two is that the Housing and Recovery Act is designed to help those “in a state of delinquency” due to job loss or medical problems, while Hope for Homeowners is for those “who should never have become homeowners in the first place.”

Burns’s advice to all homeowners who are having financial difficulties is to “call your lender.”

MIT Professor Simon Johnson says that while the global economic crisis is grave, the U.S. is ahead of the the world in its response to this potential disaster. (0:52)

 

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At a discussion hosted by the Center for Strategic and International Studies on developing definitive strategies against the world food shortage, Senator Robert Casey (D-Pa.) says Americans are summoned by their consciences to help. He said the extent of the food crisis is “hard to even comprehend.” (0:38)

 

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Dr. Peter Orszag, Director of the Congressional Budget Office (CBO), testified today before the Senate Budget Committee regarding the crisis generated by increasing health care costs.

In testimony that Chairman Kent Conrad (D-ND) called “sobering,” Dr. Orszag displayed CBO’s projections that health care spending could double by 2035 and become 20% of the economy by 2082 should current policies and practices remain in place. He stated that such high expenditures cannot be allowed to take place.

CBO’s analysis finds that non-Medicare, non-Medicaid health care costs are rising at alarming rates, due in large part to rapid expansion in medical technologies and capabilities; that is, the variety of care continues to increase, expanding costs. Other factors contributing to this increase include increased incidence of obesity, spending per obese person, aging of the population, and industry incentives to provide more health care regardless of quality.

Dr. Orszag highlighted extreme expenditure differences across regions and examples of some hospitals spending up to twice as much as others for the same treatment. He that in his research he had been faced with the ironic question, “How can the best medical care in the world cost twice as much as the best medical care in the world?”

Given the severity of the consequences of inaction, Chairman Kent Conrad (D-ND) and ranking member Judd Gregg (R-NH) shared their intention of going to mark-up on a proposal to resolve this crisis in a bipartisan fashion.

Dr. Orszag, Director of the Congressional Budget Office, describes how health care expenditures increase as a function of both increased incidence of obesity and increased spending per obese person. (0:55)

 

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