As they race back and forth between Ohio and Texas in advance of their March 4 primary showdown, Barack Obama and Hillary Rodham Clinton are squaring off over who has the answer to the nation's spiraling foreclosure crisis.
Neither presidential rival offers a comprehensive solution, economists say, but that has not inhibited them from touting their populist credentials and tugging at voters' heartstrings.
Hours before he won the Wisconsin primary Tuesday, Obama met with a San Antonio couple trying to save their home, then emphasized his proposal to provide tax credits to struggling homeowners and toughen prosecution of predatory lenders.
Last week, Clinton comforted a Wisconsin woman who had just received her first foreclosure letter. Then Clinton flew on to Ohio, where she promoted her plan for temporary freezes on foreclosures and on adjustable interest rates on sub-prime mortgages.
Officials struggling with the foreclosure issue in both states say the attention is long overdue. "We've been at the epicenter of this disaster for so long we're in the mopping-up phase now," said Jim Rokakis, the treasurer for Cuyahoga County in Ohio, a state wracked with nearly 90,000 repossessions last year -- the sixth-highest rate in the nation.
But some economists caution that neither candidate's foreclosure solution deals with the systemic losses still to come in the faltering housing market and banking industry.
"The conundrum for the candidates is that the threat to homeownership is an emotional issue that every voter can relate to. But there's not much they really can do about it," said L. Josh Bivens, an economist with the Economic Policy Institute in Washington.
Obama and Clinton are in basic sync about some economic issues, but their approaches on the foreclosure crisis are markedly different.
Obama's solution has been criticized by Clinton and some economists as too marginal to offer real aid to imperiled homeowners. But Clinton's more populist-tinged plan has also been judged faulty and is undermined by her contradictory Senate stands on a Republican-backed bill that passed in 2005, gutting bankruptcy protections for mortgage-holders.
The main thrusts of Obama's cure-all would give a tax credit to struggling homeowners covering 10% of the interest on their mortgages each year and offer $10 billion in bonds to help the middle-class avoid foreclosures. The Illinois senator also would toughen penalties on lenders who draw unsuspecting buyers into usurious mortgages.
Obama's approach squares in many ways with the philosophy of economists who believe that the home mortgage bubble needs to pop on its own. But it clashes with his sometimes-heated populist rhetoric on the campaign trail.
"We need to restore fairness and balance to our economy so we can put the American dream within the reach of every American," he said Tuesday in San Antonio.
Obama's comment came after he met with Teresa Molina, a local resident who almost abandoned the home she shares with her husband, Edward, after its monthly mortgage costs ballooned.
"We didn't know where we would go, but we'd go together," she told Obama.
There were nearly 150,000 foreclosures in 2007 in Texas. But because house prices are more stable in much of Texas than in Ohio and other struggling regions, the state's repossession rate was 12th in the nation. However, some areas, such as Dallas and north Texas, have been hit hard.
"If you live in one of the trouble spots, it can feel as bad as anywhere," said Jon Hockenyos, president of TXP, an Austin-based economic analysis firm.
Economists question whether Obama's $10-billion "foreclosure prevention fund" would cover the thousands of Americans who already have lost homes and the thousands more who are in danger.
"It's a drop in the bucket," Bivens said. Clinton echoed that skepticism Wednesday, saying that Obama's plan was a "half-hearted attempt. You can't have a real plan to stop foreclosures if all you're helping is the banks."
Obama and his policy aides dismiss the criticism, saying that with a slowing economy and rising healthcare costs, there is only so much funding and legal tinkering that can be done. A major focus, they say, is returning protections to the bankruptcy code that were eliminated by the 2005 bankruptcy act backed by the Bush administration and Republicans in Congress.
The 2005 vote, Rokakis said, "took power away from magistrates and judges to protect people who were declaring bankruptcy to save their houses."
Obama voted against the GOP-backed bill. But Clinton voted for an early version of that measure in 2001, then abstained when the Senate passed it into law in 2005. Her stance has complicated her efforts to portray herself as a champion for distressed homeowners.
In a Congressional Record insert before the 2005 vote, Clinton explained her earlier vote for the measure as an attempt to "hold accountable people driven into bankruptcy because of their own irresponsibility." She insisted that she would have voted against the bill in 2005 but abstained because of "unavoidable circumstances."
Earlier this week, her campaign spokesman, Howard Wolfson, said she was unable to take part in the 2005 opposition because Bill Clinton had just had heart surgery and "she was dealing with his health issues." Obama spokeswoman Jen Psaki countered that "she still hasn't articulated why she supported it the first time."
Now, however, Clinton is an unabashed supporter of aid for threatened homeowners. In Kenosha, Wis. last week, while speaking during a forum at the Brat Stop, a local restaurant, the New York senator was approached by 11-year-old Jade Bailey, who told her: "We're losing our home."
Clinton led the young girl and her mother, Donna, up to a small stage. There she listened as Donna Bailey, a 42-year-old hairdresser, explained how her family has scrounged for money to pay an adjustable-rate mortgage whose payment recently doubled. A foreclosure notice arrived last week.
Clinton's solution is a 90-day moratorium for foreclosures on sub-prime occupied homes, and a five-year rate freeze on sub-prime adjustable rate mortgages. The Bush administration has already responded with a 30-day cooling period on foreclosures; Clinton and her aides insist a longer freeze is essential for stabilizing a precarious situation for homeowners.
But according to some economists and officials grappling with the crisis, her proposal, which also offers a $30-billion foreclosure fund that is triple the size of Obama's, might only prolong the agony for homeowners.
"A 90-day freeze is fine for what it is, but what happens on the 91st day?" Rokakis asked. "Why not a year? Or longer?"
In San Antonio on Tuesday, Obama said that Clinton's foreclosure freeze was potentially "disastrous," rewarding "people who made this problem worse" by benefiting banks that profit from high mortgage rates.
A "blanket freeze," Obama added, might "drive rates through the roof for those trying to buy or refinance. Experts say the value of homes will fall even more, and even more families could face foreclosure."
Riccardi reported from Hidalgo, La Ganga from San Antonio and Braun from Washington.