The Wall Street Journal reported earlier this month that the Obama administration has been trying to cajole Fannie Mae and Freddie Mac into writing down loan principal for troubled homeowners. Incoming House Financial Services Chairman Spencer Bachus (R-AL), however, is not on-board with the effort. And he’s evidently not alone.

In fact, the GOP is so dead-set against helping borrowers who are underwater on their mortgages — meaning they owe more than their house is currently worth — that they are delaying confirmation of the administration’s nominee to lead the Federal Housing Finance Agency (Fannie and Freddie’s chief regulator) because he might be sympathetic to loan write-downs:

Senate Republicans are pressing to delay the confirmation of Joseph A. Smith, the North Carolina banking commissioner, to head the Federal Housing Finance Agency. They are concerned he might allow Fannie and Freddie to participate in an Obama administration initiative to write down loan balances, say people familiar with the matter.

Mr. Smith first appeared to be headed for a quick confirmation. But he has become tripped up by a broader fight between the White House, which wants to use the firms to help heal housing markets, and GOP critics that say they shouldn’t be run as policy vehicles that create more losses.

The administration’s foreclosure prevention efforts have largely flopped, and the banking industry is on pace to foreclose on one million homes both this year and next. Allowing Fannie and Freddie to write-down loans could help put a dent in these huge numbers.

Republicans, however, are arguing that such a move is unfair, as Fannie and Freddie would be forced to eat losses while helping only specific homeowners. Senate Banking Committee Ranking Member Richard Shelby (R-AL) said that write-downs amount to “redistribution from taxpayers in general to certain classes of home owners.”

But this basically ignores the wider negative effects foreclosures, which drag down home values for everyone. As The American Prospect’s Tim Fernholz explained:

[Republicans have a] rather short-sighted approach, given that Fannie and Freddie are already propping up almost the entire housing market, and that the costs of both foreclosure and consumer debt overhang are a drag on the broader economy. Foreclosure is everyone’s problem, especially when many of these borrowers are underwater not because of their own irresponsibility but because of dramatic drops in the price of housing.

According to Treasury Secretary Tim Geithner there “is a pretty good economic case for Fannie Mae and Freddie Mac to participate in those programs.” FDIC Chair Sheila Bair has also called for principal write-downs, saying that they “could help reduce defaults, keep people in their homes, avoid costly foreclosures, and enhance the value of these loans.” But the GOP has stood in the way of every effort to help troubled borrowers, and this is no exception.

CBS’ 60 Minutes ran a segment last night on the fiscal nightmare currently underway in most of the states across the country. Faced with plummeting tax revenue and a rising demand for services in the wake of the Great Recession, many states are staring at huge fiscal holes (and most are constitutionally mandated to balance their budgets). The Center on Budget and Policy Priorities estimates that states are $101 billion in the hole for fiscal year 2011.

The segment praised Gov. Chris Christie (R-NJ) as the “canary in the coal mine” for state budget woes, featuring him prominently for, among other things, canceling a planned rail tunnel underneath the Hudson River, laying off thousands of public employees, and cutting education funding.

But even with these cuts, Christie is facing a $10.5 billion deficit. Warning that the “day of reckoning” has arrived, Christie said that there are “no alternatives” except to continue gutting education funding and public employee benefits:

The reason it’s different is because the only choices left are choices that people previously have said were politically impossible. That you couldn’t do. You couldn’t cut K-12 education funding, you couldn’t do those things. You couldn’t talk about pension and benefit reform for the public sector unions. We are now left with no alternatives.

Watch it:

Christie kept emphasizing that, when it came to funding for important projects, “I literally don’t have it.” But that begs the question (which CBS left unasked): if Christie is so certain that his state doesn’t have money to upgrade its infrastructure or prevent its schools from seeing their funding slashed, why is he contemplating cutting both his state’s personal income and corporate income taxes?:

New Jersey Governor Chris Christie may propose business- and income-tax cuts as soon as January, said Robert Grady, chairman of the governor’s Council of Economic Advisors. Christie and Treasurer Andrew Sidamon-Eristoff are evaluating options for reducing individual and corporate taxes, Grady said at a conference of business owners in Woodbridge today.

Back in September, Christie made some noise about cutting New Jersey’s top marginal income tax rate, which only applies to those making more than $500,000 annually (about seven times New Jersey’s median income). The Newark Star-Ledger criticized that decision, writing, “he was the guy telling us to live within our means, to face hard realities. And now this — a tax cut that would blow a new hole in the budget.” And it seems that he’s now added cutting the state’s corporate tax rate in to the mix.

Remember, in May, Christie vetoed a tax increase that would have applied only to his state’s millionaires. So on the one hand, Christie is warning about a “day of reckoning” forcing him to cut education funding, cancel infrastructure projects (thus losing jobs), and take a knife to public sector benefits, because everyone has to “share in the sacrifice.” But on the other, he is considering tax reductions for the wealthy. This is a nice microcosm of conservative priorities in action.

Senate Republicans last week successfully defeated an omnibus spending bill that would have funded the government through the end of the current fiscal year (October 2011). To avoid a government shutdown, the new plan is to pass a continuing resolution that funds the government at the current level through March 4, 2011.

The resolution unveiled by Senate Democrats, aside from the obvious benefits of keeping the normal functions of government rolling ahead, also addresses some key problems. Chief among them is covering the $5.7 billion shortfall in Pell Grants, which would have resulted in award cuts if it wasn’t addressed.

However, the resolution does not include funding for the implementation of the Dodd-Frank financial reform law. Under the omnibus, the Securities and Exchange Commission would have seen its budget increase to $1.3 billion from $1.1 billion, and the CFTC would have gone from $169 million to $286 million.

Already, the SEC has halted implementation of a variety of measures under the law as it waits for funding. Included in this halt are new regulations for credit rating agencies and an office for financial markets whistleblowers. The Commodity Futures and Trading Commission (which is charged with implementing the derivatives title of the bill) has said that its current funding level “is far less than what is required to properly fulfill our significantly expanded role.” “The implementation of that good and historic law is in jeopardy if the CFTC doesn’t have increased resources,” Bart Chilton, a CFTC commissioner, has said.

If the prospects for enhanced funding next year looked promising, this would be less of a problem. However, House Republicans are threatening to deny funding to the agencies implementing the bill when they take control, and in particular to kneecap the newly-created Consumer Financial Protection Bureau before it even gets off the ground. This is much the same game that the GOP is threatening to play when it comes to funding the Affordable Care Act, which also got tripped up by the omnibus spending bill’s defeat.

One of the most legitimate criticisms of Dodd-Frank is that it left too much discretion to the regulators to design and implement new rules. Denying those regulators the funding to do an adequate job is a good way to make government look ineffective and then use government ineffectiveness as a justification for policy changes.