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Obama heads west to sign stimulus bill

After a stop in Denver, where unemployment is 6.3%, he'll announce a housing plan in hard-hit Phoenix.

February 17, 2009|Peter Nicholas

WASHINGTON — President Obama is venturing out of the White House today for a Western swing that will see him sign into law the $787-billion stimulus package and roll out a plan meant to keep struggling families from losing their homes.

The two-day trip to Denver and Phoenix reflects a decision by the president to escape the Beltway at least once a week in hopes of staying in closer contact with ordinary Americans. The visit also taps into Obama's political strength, placing him in front of supportive crowds eager for any financial relief the stimulus will deliver.

The president is to sign the stimulus bill in Denver today; a day later, in Phoenix, he'll announce details of a plan to avert home foreclosures.

"Denver is emblematic of the crisis that America's economy is facing, but also of the benefits that American communities can see from this recovery plan," said Bill Burton, a White House spokesman. "A lot of middle-class families will be able to take advantage of the tax cuts in the plan.

"Arizona is a place where the housing crisis is most felt."

Last week, Obama traveled to Elkhart, Ind., and Fort Myers, Fla., for town hall-style events intended to pressure Congress into passing the stimulus bill. In the Denver area, unemployment has climbed sharply. The jobless rate stood at 6.3% in December, according to preliminary data compiled by the Bureau of Labor Statistics, up from 4.4% the year before.

In using Arizona as the backdrop to announce his housing plan, Obama is choosing a state hit hard by foreclosures. In January, more than 4,500 homes in Arizona were repossessed, the third highest number in the nation, according to RealtyTrac, a company that collects foreclosure data. Last month, California ranked first.

Obama has dropped hints about the broad outlines of his housing plan, estimated to cost $50 billion to $100 billion. Speaking in Elkhart last week, he said he would push for a new law that allows judges to rewrite the terms of a mortgage for homeowners who land in bankruptcy court.

Without such a law, people are being forced into "foreclosure who potentially would be better off, and the bank would be better off, and the community would be better off if they're at least making some payments, but they're not able to make all the payments necessary," Obama said.

The following day, in Fort Myers, Obama outlined an arrangement in which banks would accept lower payments from homeowners in return for an equity stake once housing prices recover.

A Democratic congressional aide said Monday that Obama's housing plan will have two pieces. One will involve changes in law that can only be made by Congress -- such as empowering bankruptcy judges to restructure mortgages. The other will involve actions Obama can take by executive fiat.

Fixing the housing crisis cannot be done in isolation, experts said. Obama also needs to create jobs and stabilize the financial markets, steps that will help improve the broader economy and ultimately help housing prices rebound, they said.

"Job losses are most damaging to the housing market, so taking on this challenge in the face of continuing job losses in the months ahead will be very difficult," said Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University. "Saying all of that, it's pretty clear that standing on the sidelines as a spectator -- which might be a harsh criticism of government over the past year, but is not too far off the mark -- certainly didn't do the job."

Obama's appearance in Denver is a coda to the first major legislative challenge of his tenure: the stimulus plan. Though it may take months or years to see if the stimulus worked, the political reverberations are already being felt. Obama won, but the victory was messy.

He got only three Republican votes in the Senate and none in the House. Even some Democrats are complaining about a process in which the president's priorities seemed subordinated to those of influential figures in Congress.

A Democratic lobbyist said he spoke privately last week to a White House official, who said Congress appropriately took the lead in writing the stimulus bill.

The White House official said, "The president's a constitutional scholar. He knows the president doesn't write the laws, so he's not writing the bill," recalled the lobbyist, who spoke on the condition of anonymity.

That Obama is visiting two key states on the electoral map may not be an accident. He won Colorado in 2008, picking up a state that had voted for President Bush four years earlier. Obama lost Arizona to Republican John McCain, but the state is McCain's home.

But John McLaughlin, a Republican pollster, said in an interview that both states have a streak of fiscal conservatism that might make them suspicious of the stimulus.

"In the Democrats' new view of the electoral college, they see this as an opportunity," he said. "But the stimulus package, which has been derided as a spending plan full of pork and debt, may not play well with the voters at large. Granted, the president will have a lot of enthusiastic supporters who surround him, but the rest of the voters in the state of Colorado and Arizona may not be too fond of the debt and deficit that he just burdened them with."

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peter.nicholas@latimes.com

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