WASHINGTON — Two leading Democratic presidential contenders raced ahead of the Bush administration Wednesday in calling for more sweeping measures to help struggling homeowners with their mortgages.
Sen. Hillary Rodham Clinton of New York, the party front-runner, said in a Wall Street speech that the plan expected to be unveiled today by President Bush was inadequate. She proposed a foreclosure moratorium of at least 90 days for distressed holders of sub-prime mortgages who live in their own homes. She suggested that if investors did not agree to the moratorium, as well as a five-year freeze on mortgage rate hikes, she would propose legislation to order the changes.
John Edwards, the former North Carolina senator, upped the ante by calling for a seven-year freeze on rates for families with mortgage problems and creation of a federally financed "home rescue fund" to help low-income homeowners negotiate more sustainable mortgages.
The Democrats' proposals came as Bush was set to depart from the free-market approach he usually favors on economic issues and announce broad government action to help hard-pressed homeowners. The plan would include a five-year freeze on some but not all sub-prime loans, speedy refinancing for other borrowers and permission for state and local governments to use more tax-exempt bond programs to underwrite refinancing.
The fast-paced action by the Democratic candidates and the administration suggest how the foreclosure issue and the state of the economy are playing a greater role in the presidential campaign as it approaches its first tests of voter sentiment in Iowa and New Hampshire next month.
Indeed, some pollsters say the economy is fast becoming the dominant issue. "I'm calling it one of the mega-issues for 2008," said pollster John Zogby.
Calls for government action by the White House and the Democrats have caught most of the Republican presidential candidates off guard. Loyal to decades of GOP policy, they have presented generally rosy assessments of the economy, derided Democratic calls for government action and insisted that further tax cuts and market forces would cure any economic dislocations.
Former New York Mayor Rudolph W. Giuliani, who leads the Republican field in national polls, says that homeowners bear substantial responsibility for signing up for risky mortgages and has voiced skepticism about government action.
