In a new report, Roosevelt Institute Senior Fellow Mike Konczal looks at several theories that attempt to explain the relationship between the weak housing market and the sluggish economy, and comes to the conclusion that mortgage debt (and not some structural factor) is one of the major factors holding back the recovery:

– The most recent empirical evidence, from academic quarters to the IMF, shows that underwater mortgage debt is creating a drag on the economic recovery. The recovery is weaker in places where mortgage debt is the highest, as more mortgage debt results in lower consumption and higher unemployment.

– Other explanations of the relationship between the housing crash and the weak economy, such as structural unemployment created by the house bubble, contain serious weaknesses.

– Debt writedowns, foreclosure mitigation, and other housing sector specific policies are a crucial tools in dealing with this “balance-sheet recession” and gettng the economy started again.

– Foreclosures exacerbate these problems by creating vicious cycles of destructive economic activity. Some estimate that foreclosures have caused an additional 25 percent of the decline in economic activity.

As this chart shows, the areas with the largest percentage of underwater mortgages have the highest unemployment rates:

A recent study from the Amherst Securities Group found that reducing mortgage debt is the most effective strategy for preventing foreclosures. Iceland, in fact, effectively used mortgage debt forgiveness to boost its economy. A bipartisan bill introduced this month by Reps. Gary Peters (D-MI), John Campbell (R-CA), and Keith Ellison (D-MN) would mandate debt reduction on government held mortgages.

House Republicans, after failing to prevent the 2010 Dodd-Frank financial reform law from passing Congress, have attempted to undermine it by refusing to give Wall Street regulators adequate funds to do their jobs. Both the Securities and Exchange Commission and the Commodity Futures Trading Commission are short of the funding they require, and House Republicans recently voted in committee to fund the SEC $245 million below the Obama administration’s request for 2013.

However, should that funding bill actually reach President Obama’s desk, he has announced that he will veto it:

The 2013 Financial Services bill is heading to the House floor after being considered by the Rules Committee on Thursday.

“The bill severely undermines key investments in financial oversight and implementation of Wall Street reform to protect American consumers, as well as needed tax enforcement and taxpayer services. It also hampers effective implementation of the Affordable Care Act (ACA),” the White House statement reads.

House Republicans on the Appropriations Committee also recently approved a cut of $25 million to the CFTC’s budget.

Just ten days ago, the Republican chairman of the House Financial Services Committee admitted that Wall Street regulators do not have the resources necessary to do what Congress has asked of them. However, House Republicans have not acted to rectify the situation, instead bringing to the House floor a bill that would simply exacerbate the problem.

Following the Supreme Court’s ruling yesterday that Obamacare, the 2010 health care law, is constitutional under Congress’ ability to tax, Republicans have launched a full court press calling the individual mandate a “massive tax hike.” But as ThinkProgress noted yesterday, there is no massive tax hike: few people will ever pay the penalty, and those who do will pay less than the amount of the payroll tax increase that Republicans nearly allowed to occur.

In addition, according to a report from Families USA, 28.6 million Americans, most of them middle-class, will receive tax cuts under the bill due to entering health care exchanges and receiving affordability credits:

We found that an estimated 28.6 million Americans will be eligible for the tax credits in 2014, and that the total value of the tax credits that year will be $110.1 billion. The new tax credits will provide much-needed assistance to insured individuals and families who struggle harder each year to pay rising premiums, as well as to uninsured individuals and families who need help purchasing coverage that otherwise would be completely out of reach financially. Most of the families who will be eligible for the tax credits will be employed, many for small businesses, and will have incomes between two and four times poverty (between $44,100 and $88,200 for a family of four based on 2010 poverty guidelines).

In addition to these tax credits and the fact that more than 30 million Americans will have new access to health insurance, the health care law will help create millions of jobs.

Reducing gun-related homicides would have a positive impact on housing prices in cities across the United States, according to a Center for American Progress report released this week.

The report studied violent crimes in eight cities across the country and found that reducing the rate of homicides corresponds to rising housing prices. According to the report, cities like Boston and Philadelphia would see increases in home prices worth billions of dollars:

On average, a reduction in a given year of one homicide in a zip code causes a 1.5 percent increase in housing values in that same zip code the following year. We applied these findings to available data on the value of the housing stock in the metropolitan areas of all eight cities. The estimated increases in the value of the housing stock for the eight cities and their immediate metropolitan areas, following a 10 percent reduction in homicides, range from $600 million in Jacksonville and the surrounding area to $800 million in the Milwaukee area, to $3.2 billion in Philadelphia and the surrounding suburbs, and $4.4 billion in the Boston area. Unfortunately, inconsistent reporting of other types of violent crime—rapes, assaults, and robberies—preclude a reliable analysis of the impact on housing values of changes in the incidence of those crimes.

Boosting housing values in these areas and others would help cities and states solve their dire budget situations as well, since it would increase the amount the cities and states take in through property taxes. That would help avoid cuts to education and other vital programs that have been crunched during the recession and recovery.

And because two-thirds of homicides are committed with handguns, this report makes it clear that reducing the amount of handguns in our communities — and thus reducing the amount of violent crime committed with those guns — has positive economic benefits.

In light of the Supreme Court’s 5-4 ruling today upholding the Affordable Care Act as constitutional under Congress’ power of taxation, Congressional Republicans moved quickly to spin this loss as a “massive tax increase.”

But if these Republicans believe that individual mandates constitutes a tax increase, they must therefore believe that Mitt Romney raised taxes in Massachusetts when he signed RomneyCare into law. Here are just some of the scores of House and Senate Republicans who apparently believe Romney is a tax raiser:

1. Senate Republican Leader Mitch McConnell (R-KY): The Supreme Court has spoken. This law is a tax. The bill was sold to the American people on a deception
2. House Speaker John Boehner (R-OH): House Republicans remain committed to #FullRepeal of the president’s health care law and all its tax hikes, fees and mandates
3. House Republican Whip Kevin McCarthy (R-CA): #ObamaCareInThreeWords –> Huge Tax Increase. < -- ‪#FullRepeal ‪#ObamaTax
4. Rep. Martha Roby (R-AL): Check out this interview with President Obama from 2009 when he “absolutely” rejects the idea that the healthcare…
5. Rep. Lynn Jenkins (R-KS): Flashback: White House sold #Obamacare as “NOT A TAX” in 2009http://1.usa.gov/LDAWsH #hcr #tcot
6. Rep. Joe Walsh (R-IL): We must now face 2 realities: 1 the Pres #healthcare plan is a new tax & now the law of the land & 2 that #FullRepeal has to be top priority
7. Sen. Jerry Moran (R-KS): Health care law still jeopardizes access to quality care for many in KS & stifles job growth via higher taxes & costly regs. #FullRepeal
8. Sen. Kelly Ayotte (R-NH): By imposing coercive tax on Americans, hc law is an unprecedented fed overreach into personal lives. Will continue to fight to repeal it.
9. Sen. Dean Heller (R-NV): #ObamaCare has now been affirmed as a colossal #TaxIncrease on middle class Nevadans & @Berkley4Senate voted for it.
10. Rep. Kevin Brady (R-TX): Ways & Means: Supreme Court’s Health Law Decision Leaves in Place 21 Tax Hikes Costing Taxpayers More Than $675 Billion

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The Supreme Court ruled today that the Affordable Care Act, the comprehensive health care reform package signed by President Obama in 2010, is constitutional. The Court upheld the law’s most controversial provision, the individual mandate, ruling that it is constitutional under the government’s authority to levy and collect taxes.

Republicans have falsely claimed the mandate was the “biggest tax increase ever in American history,” so of course, conservatives immediately jumped on the idea that the individual mandate was a massive tax hike on the middle class, reviving an argument Republicans have made since the law passed more than two years ago:

WISCONSIN GOV. SCOTT WALKER (R) declared that it was a “massive tax increase.”

INDIANA SEN. DAN COATS (R) said “Right now we have something with a big tax and the American people who rejected that in 2010 are going to have a chance to break the tie in 2012.”

LOUISIANA GOV. BOBBY JINDAL (R) said “Ironically, the Supreme Court has decided to be far more honest about Obamacare than Obama was. They rightly have called it a tax. Today’s decision is a blow to our freedoms.”

IDAHO SEN. MIKE CRAPO (R) touted that the mandate was ruled a tax. “Now, we’re back into that argument,” he said.

Watch Coates:

The mandate can indeed be characterized as a tax, as the Court found. But it is not a massive tax hike on the middle class, much less the biggest tax hike in American history. The tax imposed by the individual mandate amounts to either $695 or 2.5 percent of household income for those who don’t have insurance and are not exempt based on income levels. By comparison, the payroll tax cut extension Republicans repeatedly blocked earlier this year would have added 3.1 percentage points to the tax and cost the average family $1,500 a year.

The mandate, meanwhile, would hit a small amount of Americans — somewhere between 2 and 5 percent — according to a study from the Urban Institute. The number could be even lower depending on the law’s success: in Massachusetts, the only state with an insurance mandate, less than 1 percent of the state’s residents paid the penalty in 2009.

The majority of the Affordable Care Act’s other taxes, such as a payroll tax increase and a tax on high-cost health plans, are aimed at upper-income Americans. In exchange, millions of jobs will be created as new people enter the health care system and millions of people will gain access to affordable, quality insurance that they otherwise would not have. And, as we detailed earlier today, the Court’s decision to uphold the entirety of the law will have significant benefits for the nation’s economy.

Tell Congress that you stand with Obamacare by adding your name here.

The Supreme Court today upheld the Affordable Care Act, the health care reform law signed by President Obama in 2010, ruling 5-4 that the law was constitutional. Chief Justice John Roberts joined Justices Sonya Sotomayor, Stephen Breyer, Ruth Bader Ginsburg, and Elena Kagan on the opinion. The individual mandate, the requirement that all Americans purchase health insurance or pay a fine, was upheld as legal under Congress’ taxing ability.

Health care reform isn’t important just because it expands access to quality, affordable care, but also because rapidly rising costs and the fact that 30 million Americans don’t have insurance are weighing down the American economy. Here are four reasons why the Court’s decision is good news for the still-struggling economy:

1) Obamacare will reduce the deficit. The Congressional Budget Office estimated in 2011 that Obamacare will reduce the federal deficit by $210 billion over the next decade. The law is expected to save about $1 trillion over its second decade, according to other CBO analyses. The CBO found that repealing the law, as Republicans attempted to do in 2011, would increase the deficit by $230 billion over the next 10 years.

2) Health care costs for young Americans won’t skyrocket. More than 3.1 million young Americans have insurance thanks to Obamacare. Without the law, the cost of acquiring an equivalent health care plan would have risen dramatically at a time when young people are still struggling with the effects of the Great Recession.

3) Millions of jobs will be created. Health reform will help create roughly 4 million jobs over the next decade, according to a 2010 Center for American Progress report, by reducing the cost of health care and making it cheaper for businesses to hire. The law will create between 250,000 and 400,000 jobs a year, and they will be spread across sectors: according to the study, the law will help create more than 200,000 manufacturing and 900,000 in the service sector by 2016.

4) It will be cheaper for employers to provide health care. American businesses are under tremendous pressure thanks to rising health care costs, and these costs are often passed on to customers (one study estimates that each car sold by General Motors contains $1,200 in built-in health costs). The ACA, however, will make it cheaper for businesses to provide care, and not just by reducing the cost of care. Small businesses are already receiving tax credits contained in the law to help insure their employees, and it has already offered more than $4.7 billion in reinsurance payments to companies that are providing health care to retirees who aren’t yet eligible for Medicare.

Even a judge who was a finalist for appointment to the Supreme Court under George W. Bush agreed that striking down health care would have had disastrous consequences for the American economy. “States’ rights are important in many spheres, but the benefits of a national economic policy must also be considered,” federal appeals court Judge J. Harvie Wilkinson wrote in February. “A vibrant economic order requires some political predictability, and the prospect of judges’ striking down commercial regulation on ill-defined and subjective bases is a prescription for economic chaos that the framers, in a simpler time, had the good sense to head off.” Fortunately, a majority on the Supreme Court agreed.

Tell Congress that you stand with Obamacare by adding your name here.

The Mitt Romney campaign met with editors of the Washington Post today in an attempt to get the paper to retract a story about how the private equity firm Bain Capital helped outsource jobs when Romney was its CEO. Initially, the campaign merely admonished the Post for not distinguishing between “outsourcing” and “offshoring,” but today it brought a set of slides in an attempt to refute the entire premise of the story.

However, the evidence that the campaign provided does not contradict the paper’s reporting, which was gleaned from documents filed with the Securities and Exchange Commission. Instead, the campaign’s document simply includes assertions from executives of the companies in which Bain invested, claiming that they did not outsource jobs.

Left unsaid is that these executives have a vested interest in not being seen as offshoring jobs. “None of these 6 companies sent jobs overseas under Bain Capital during Mitt Romney’s tenure, in fact they added jobs,” the campaign’s document claims, providing no sources of evidence. Here are some of the slides:

The Post is standing by its story.

Our guest blogger is Seth Hanlon, Director of Fiscal Reform at the Center for American Progress Action Fund.

A House subcommittee held a hearing today titled “How Welfare and Tax Benefits Can Discourage Work.” The clear subtext of the hearing is that negative work incentives can justify cuts to safety net programs and tax credits for the working poor — in other words, that such cuts can actually be good for affected families.

The House Republican budget, authored by Budget Committee Chairman Paul Ryan (R-WI), cuts low-income programs by $3.3 trillion over the next ten years. And by reducing tax credits for working parents, it raises taxes, on average, on households with incomes below $30,000.

A new report shows that these cuts are not justified by the supposed concern that tax credits discourage work. The report from the Center on Budget and Policy Priorities summarizes the economic literature on the Earned Income Tax Credit, one of the nation’s most important pro-work, anti-poverty programs. That literature indicates that the EITC increases work – not only among the parents who claim the credit but also their children, later in life. Among the important findings:

– “The overwhelming finding of the empirical literature is that the EITC has been especially successful at encouraging the employment of single parents, especially mothers.”

– EITC expansions were more important than welfare reforms enacted in 1996 in increasing employment and decreasing cash welfare assistance among single mothers during the 1990s.

– While the EITC “induces substantially more workers to enter the labor force,” there is “little evidence that the phasing down of EITC benefits as income rises above certain levels causes workers to significantly reduce their work hours.”

As the report emphasizes, a growing body of literature also indicates that a critical aspect of tax credits like the EITC and CTC is increased educational achievement, income, and levels of work among the children of tax credit recipients. Recent studies have found:

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