In anticipation of today’s mortgage refinancing policy announcement in Las Vegas, White House Communications Director Dan Pfieffer writes:

Using the mantra “we can’t wait,” the President will highlight executive actions that his Administration will take.  He’ll continue to pressure Congressional Republicans to put country before party and pass the American Jobs Act, but he believes we cannot wait, so he will act where they won’t.

Mantra? That’s a signal to the President’s political allies: please repeat this phrase.

The new policy will allow some homeowners who are underwater on their mortgages to refinance at lower interest rates.  It does this by waiving some fees and shifting a bit of incremental risk to taxpayers through Fannie Mae and Freddie Mac, which are now in effect wholly-owned subsidiaries of the U.S. government.

This is an incremental expansion of an existing housing refinance program.  If effective, it will help some more underwater taxpayers with fixed-rate mortgages, at some risk of increased cost to taxpayers.  The Administration is using phrases like “may help up to 900,000 homeowners.” Key words are may and up to.

Mortgage refinancing policies are quite hard to do at scale.  If recent history is a guide, this program may help a few tens of thousands of homeowners.  That’s a trivial macroeconomic impact.  Even if it does help 900,000 homeowners, the effects will be small enough that they won’t show up on most macro forecasts.  Its greater benefit may be political: it creates another talking point for the President.

If this were a huge program that would help several millions of underwater mortgages at an enormous cost to the taxpayer, there would be some interesting policy tradeoffs worth exploring.  In particular, are the macroeconomic benefits of helping these homeowners refinance and potentially escape from their underwater mortgage worth the increased costs to the taxpayer and the inequities created in which one group of Americans subsidize others whose