Sen. Johnny Isakson doesn’t think things are too desperate to accomplish anything n Capitol Hill. Now might be the perfect time, he told ABC News’ Subway Series with Jonathan Karl.
“Right now we’ve got the inspiration of desperation,” he said. “Our country is deep trouble. Our economy is struggling. We have a lot of Americans out of work, foreclosure rates are high and just like my generation, they’re taking early social security now because they don’t have a job. We need to turn this thing around and bring America back. We can do it now. We’ve done it before. ”
That’s the kind of attitude that has Isakson pushing a bipartisan bill to fix lending laws, ready to support some infrastructure spending with President Obama to spur job growth, and even admit that the country will need some more tax revenue to deal with the economy.
In addition to being the only living politician to defeat Herman Cain – the 2004 GOP primary in Georgia was Cain’s only previous race – Sen. Johnny Isakson has some informed thoughts on what he says needs to get done to fix the housing market.
“I went through the ’68 recession, the ’74 recession in housing, ’81-’82, and ’90-’91. I’m not an expert at anything but I am in real estate recessions and housing recessions,” said Isakson. “And what brings them back is a positive policy in the federal government to deal with what brought about the problem.”
He says government intervention, in the form relaxed lending standards at Fannie Mae and Freddie Mac caused the real estate crisis in the first place and now the Democrats’ Wall Street reform bill has overreacted and made it too hard to get a loan.
“We got way too loosey-goosey lending standards, way too loosey-goosey underwriting standards, and now we have overreacted with Dodd-Frank and some of the other legislation where you can’t get a loan to finance a deal or if you do, you have to get it appraised three times during the course of the deliberation. You have to have triple documentation. Lenders are afraid to even make loans. The pendulum swung too far.
Isakson sponsors a bipartisan bill that would more clearly define what a well-underwritten mortgage is and, he says, hit the right medium between lending that’s too “loosey goosey” and lending that’s too restrictive.
“Until we do some things like that, this market is not coming back and until the real estate market, housing in particular, comes back, you’re not going to get unemployment below 8-8.5%,” he said, pointing to the situation in his home of Cobb County, Georgia.
“Last Friday when I got my newspaper at home, there were 76 pages of foreclosures in the newspaper, and that’s at 13 to a page. That type of thing is unsustainable and unsatisfactory, and it’s going to continue to bring the housing market down and bring values down which is going to continue to put the American families’ greatest asset and their net worth underwater.”
Isakson voted against the president’s jobs bill, but he said there are some piecemeal parts he could support.
On infrastructure spending, he called new money for roads and bridges, but not as “stimulus light,” what he said is a repeat of the stimulus law President Obama signed in 2009.
“I could support money for infrastructure. I’ve been on the Environment and Public Works Committee. I’ve been on the Transportation Committee in the House and infrastructure and roads and bridges and highways has a revenue component to it back to the United States government from a standpoint of the motor fuel tax and other taxes and tolls that come from that road. So that’s an economic engine and a catalyst so that makes sense.
He’ also support a payroll tax cut included in the bill. But he said those proposals are not the bulk of President Obama’s proposal.
“Roads, bridges and highways make sense but those are the minority of the overall proposal. The majority of the proposal is paying teachers, emergency medical personnel and other folks who are the responsibility of local government and state government or building school buildings, which is not the prerogative of the United States government at all. ”
Given that there is agreement, Isakson said he expects some things to pass Congress soon.
“We’re going to have a point, counter-point for each piece. And some of them we’ll agree on . There is room for common ground,” he said.
That may not be the case on reforming the tax code, which leaders from both parties say is a priority, but on which they have very different visions.
President Obama and Senate Democrats want to institute new taxes on the wealthy. Republicans, for the most part, do not want to raise taxes on anyone. But Isakson said those are the very people that create jobs.
“The fact of the matter is, the rich create the jobs in America, in corporate America,” he said. “We’ve got lots of capital sitting on the sidelines. We’ve got 2 trillion dollars in overseas profits stranded because we can’t repatriate them because of the oppressive total taxation of the United States tax system. So if we did what the president had recommended to him and he rejected in Simpson Bowles, if we went through expenditures and deductions and called them out like President Reagan did in 86′, use those savings to reduce the rates so business knew predictably what the rate was going to be and you stopped having so many gimmicks in the tax code, we could raise revenues and raise prosperity at the same time.”
But Isakson is not an absolutist on taxes. He said he’d like lower rates with fewer loopholes and deductions.
“Could he see himself supporting a tax reform compromise that includes increased tax revenues?”
“Absolutely,” he said.
He said the Congress will have to come together to get anything done.