Treasury: Doing Nothing, But Doing It Well


He went to Harvard, he's got a right to schvitz.

Proving that friendly witnesses always get you in the most trouble, Matt Yglesias recounts his "double super-secret background briefing" with Treasury Secretary Tim Geithner and a few other officials.

Some conclusions:

1. Treasury sees the benefits of focusing on the deficit as political rather than macroeconomic. Not in the "low politics" sense of trying to get a 1 percentage point boost in the polls, but in the "high politics" sense that you need to engage on the long-term deficit to avoid political momentum shifting sharply in the direction of contractionary short-term fiscal policy.

To render the above in English would be a disservice to a work of truly airless vacuity. I believe the idea is that Treasury officials want to talk about wooly future deficit estimates as a tactic to head off people who actually want to reduce the deficit. Maybe "engage" has a meaning I'm not picking up.

Also on the menu: Hot-buttered HAMP:

3. Treasury claims that HAMP is currently working well, though it wasn't necessarily working well in the past.

I think the sarcastic-sounding tone may be intentional. You know how the kids these days say "ba-a-a-ad" when they mean "good."

One of the few places where you will hear about the successes of the (not endangered enough) Home Affordable Modification Program is right here. Loans modified under the HAMP show lower rates of redefault, and the program itself appears to have spent a very small portion of its stated funding level. (In 2011, when the government is slow to disburse money, you may just want to assume it can't find anybody to borrow from.) It also should be noted that if the HAMP actually succeeded we'd really be screwed. In any event, the weight of the argument seems to be against HAMP, and whether this is a faithful rendering or just japery by Yglesias, it appears the Obama administration has no plans to put out a coherent defense of the program.