NEW YORK (Reuters) – Freddie Mac (NYSE:FRE – News; NYSE:FRE – News), the second largest provider of U.S. residential mortgage funding, on Friday posted a loss of $5 billion in the third quarter and predicted it would need more government support amid a “prolonged deterioration” in housing.

WHITE HOUSE MASTER TO SLASH EXEC PAY

• Cap-and-trade legislation had to limp over the finish line in the House of Representatives with the help of a few moderate Republicans, who then caught holy unshirted hell from their constituents. Environmental legislation generally has taken a drubbing in public opinion polls when people consider how costly it is.

• The Employee Free Choice Act may be stripped of its “card check” provision in the Senate, which would effectively do away with secret ballots for unionization elections. Even in its watered-down form — which still includes highly objectionable, mandatory, binding so-called gunpoint arbitration and makes no concessions to employers who don’t want to have to prop up teetering union pensions — it might not pass the Senate. And the leadership of the House has refused to touch it until the other chamber has made up its mind.

• On health care, forget the rage set off by private citizen Sarah Palin tweeting about “death panels.” Forget the misleading talk about whether there will be a “public option.” (The ever-evolving plan is one giant public option, folks.) Forget the angry voters who crowded into the town halls during the August recess. Forget that a number of Democratic senators and Sen. Joe Lieberman (I-Conn.) are still not willing to sign on to a bill. Right now, even after Obama’s address to the joint session of Congress last week, it’s possible Democrats don’t even have the votes in the House — where they currently enjoy a 77-seat majority.

It’s entirely possible — nay, likely — that Obama will lose on all three big issues. He’ll probably take that personally. As he has pushed for the passage of his reforms, his public approval ratings have taken a beating, and voters have started to trust the Republicans more than his party on a host of issues.

The question that most political handicappers are considering right now is not “Will Republicans make gains at the midterm elections?” but “How large will those gains be?”

It’s been a long time since James Carville said the most famous thing he ever said: It’s the economy, stupid. That famous phrase was in fact part of a sign hung in the Clinton campaign headquarters in 1992. There was a sense among the electorate in the fall of 1992, not entirely accurate, that the economy was foundering under George H.W. Bush. Bush lost control of the public’s perception of the economy, and then he lost the presidency.

Why with unemployment heading above 10% was Barack Obama on TV last night draining a dwindling reservoir of presidential capital on health care? Redesigning the 17% of the economy that is health care appears to be the siren song of Democratic presidencies. Mr. Obama’s crew has famously said it wouldn’t make the mistakes the Clintons made on health care. How calling forth both houses of Congress in prime time to join him in betting the ranch on health care qualifies as smarter politics than the Clintons is a mystery.

Daniel Henninger discusses how President Obama should drop his health-care agenda and focus on the economy.

Even more so now than way back in 1992: It’s still the economy, stupid.

To save himself and his party from enduring another health-care debacle, Barack Obama should put his agenda on the back burner, bend his efforts to raising the economy, and rebuild his political capital by taking credit for the inevitable rebound. That just might minimize the impending loss of House seats and allow him to revisit his wish list in 2011. The alternative is promising big, accomplishing little and getting credit for nothing. This could be America’s greatest failed presidency.

The economy is Barack Obama’s 9/11. If you’re Mr. Obama, it must seem a little unfair. One year ago at the Labor Day turn toward the stretch, Mr. Obama and his team were on the cusp of one of the most thrilling wins in American presidential history. No matter that many Obama voters were looking past all the state-based initiatives in his politics; the air was filled with possibility.

This was history’s moment. Then on Sept. 15, 2008, history hit the wall. Lehman Brothers filed for bankruptcy. The next day the Fed said it would lend a stunning $85 billion to AIG. A major money-market fund broke the buck.

This wasn’t just a recession, a reality already discussed in the summer campaign. There was a sense after the nightmare week of Sept. 15 that the American economy was imploding.

Assets in 401(k) accounts were ravaged. Much of the economy appeared to have fallen into the hands of fools and knaves. Businesses that once were economic beacons—GM, Chrysler, Lehman, much of Wall Street—were breaking off and falling into the sea.

After its Inauguration, the Obama presidency should have been driving a new health-care entitlement into everlasting law on a wave of good will. Instead, it had to deal with the stumbling economy and credit system.

Whether what they did—stimulus, the auto bailout, TARP and the rest—was the right policy is beside the point for our argument. The administration seemed to think it put a big political problem behind it, clearing the way for health care. That was a false dawn.

The most recent Wall Street Journal/NBC poll has 87% of the public somewhat or very dissatisfied with the economy. The unemployment rate is likely to go above 10% for all 2010. Whatever GDP growth may occur, there is no evidence of new-job creation. Gold’s price has risen above $1,000, suggesting inflation is swimming below the economy’s flat surface. China is stockpiling gold and worrying out loud about the weak dollar. A U.N. panel said this week the world should abandon the dollar as the world’s anchor currency.

Just now, Barack Obama’s mad obsession with arcane health-insurance puzzles looks beside the point.

I don’t think anyone fully understands yet how much damage was done to the U.S. economy and financial system by the events of September 2008. Whatever one’s belief in the $800 billion Obama-Pelosi-Summers-Romer Keynesian multiplier, it’s reasonable to believe more than rote public spending is needed to restore the American job-creation machine. The public rightly worries that a damaged economy is vulnerable to more blows.

The White House may think it and Democratic incumbents can simply pocket the credit for whatever fly-wheel growth shows up the next six months. It’s more likely the public will mark down a president who appears passive to its most pressing concern. A presidency seen leading a genuine agenda for renewed growth—offering at least some oxygen to the private economy—would be more likely to earn the broad support it simply does not have now for the agenda of its dreams.

Fat chance it will do that. We opened with the still-good advice of James Carville. We close with an even higher authority to explain last night’s odd spectacle before Congress. It’s Elwood, political director for the Blues Brothers: “We’re on a mission from God.”

“He is trying to fix the financial markets but does not have an assistant treasury secretary for financial markets. He is spending more money on transportation than anyone since Dwight D. Eisenhower but does not have his own inspector general watching how the dollars are used. He is fighting two wars but does not have an Army secretary.

He sent Secretary of State Hillary Rodham Clinton to Africa to talk about international development but does not have anyone running the Agency for International Development. He has invited major powers to a summit on nuclear nonproliferation but does not have an assistant secretary of state for nonproliferation. He has vowed to improve government efficiency but does not have the chief performance officer he promised.

‘If you’re running G.M. without half your senior executives in place, are you worried? I’d say your stockholders would be going nuts,’ said Terry Sullivan, a professor at the University of North Carolina and executive director of the White House Transition Project, which tracks appointments.”

After watching their stimulus package fail to stimulate and an increasing number of Americans wondering whether President Barack Obama has the first clue on economics, Vice President Joe Biden steps back into the fray to rescue his partner.  In a New York Times op-ed, Biden argues that voters have misunderstood Porkulus.  It wasn’t intended to deliver a big “jolt” to the economy, Biden says — apparently forgetting what he himself said last month….

…Biden says that the administration’s progress has been right on target.  Yet Biden just three weeks ago today told ABC News that the White House had misread the economy…

….As for the “jolt,” Jonathan Adler at The Corner and Mark Silva at Swamp Politics note that just a couple of weeks before that, Biden was Joltin’ Joe when it came to the stimulus…

…All of the above links come from the White House web site.  Maybe Biden would like to do a little research at the office before attempting to build the next ridiculous cover story for the failure of Obamanomics.

Well, as Nina says,
it’s [the stimulus package] a trillion dollar mulligan. You know, the
first rule in Washington is if you’re in a hole, stop digging. And this
is digging more and more into the hole.

The administration
argues that the reason unemployment is higher than they projected is
that the stimulus hasn’t yet kicked in. Well, if that is the case, why
would you argue for a second stimulus that’s going to add another $1
trillion to the debt when there is no evidence yet, admittedly—you
would admit yourself there is no evidence—that the first stimulus had
worked.

And secondly…if
you’re going to add on a second stimulus after arguing that the lag in
the effect of the stimulus is large—and that’s why we haven’t seen any
effect yet—that means that the effects of the second stimulus would be
way down the road. It would be kicking in at a time when the
administration itself is projecting that the economy will be rising and
in recovery.

So it will overheat
and over-stimulate the economy, add to inflation rates, and add hugely
to our debt at a time when we already have rumblings from the Russians,
the Chinese, and even the Indians today of removing the dollar as the
world reserve currency.

Well, as Nina says, it’s [the stimulus package] a trillion dollar mulligan. You know, the first rule in Washington is if you’re in a hole, stop digging. And this is digging more and more into the hole.

The administration argues that the reason unemployment is higher than they projected is that the stimulus hasn’t yet kicked in. Well, if that is the case, why would you argue for a second stimulus that’s going to add another $1 trillion to the debt when there is no evidence yet, admittedly—you would admit yourself there is no evidence—that the first stimulus had worked.

And secondly…if you’re going to add on a second stimulus after arguing that the lag in the effect of the stimulus is large—and that’s why we haven’t seen any effect yet—that means that the effects of the second stimulus would be way down the road. It would be kicking in at a time when the administration itself is projecting that the economy will be rising and in recovery.

So it will overheat and over-stimulate the economy, add to inflation rates, and add hugely to our debt at a time when we already have rumblings from the Russians, the Chinese, and even the Indians today of removing the dollar as the world reserve currency.