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.