Barr Supports a Freddie Mac/Fannie Mae Bail-out

by Liberty and Power

I was just starting to warm up to the guy....now this:

I think right now, doing nothing would not be advisable. As much as a Libertarian, we don't like to see — and I don't like to see — the government get further involved with yet another sector of the economy.

I think, because the government has caused this problem, similar to the savings and loan problem that the government caused a generation ago, it has to do something.

The question is, can it do enough by providing some temporary security, some temporary backup?

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Sheldon Richman - 7/26/2008

Anyone who votes for any of these scoundrels is, at best, wasting his time.

Mark Brady - 7/22/2008

Alan Walstad asks, "I'm thinking of Social Security, for example--would you just abolish it, or would you allow for benefits to continue at some level to people relying on it, who after all didn't really have much choice about paying so much in?"

But under such a proposal neither would future taxpayers have any choice about paying the taxes necessary to finance some continuing level of benefits.

David T. Beito - 7/21/2008

I may still vote for Barr but any chance that I'll put up a yard sign or a bumper sticker is rapidly diminishing.

David T. Beito - 7/21/2008

I saw the press release. As I said, a long-term plan to combine pritization with more infusions of government cash is not only a contradiction in terms but shows little understanding of the public choice dangers.

Once Barr accepts a "short-term" bailout, he immediately undermines the prospect that privatization will ever happen. For this reason, in the unlikly event his plan was signed into law, legislators would quickly revise and corrupt it once the full implications were understood.

Bill Woolsey - 7/18/2008

I hadn't even read what McCain said about Fannie Mae and Freddie Mac.

"Those institutions, Fannie and Freddie, have been responsible for millions of Americans to be able to own their own homes," McCain told reporters Thursday after a retail stop at a local diner. “They are vital to Americans' ability to own their own homes and we will do what's necessary to make sure that they continue that function.”

McCain supports the role of these institutions in funneling funds into mortgages. (I guess.)

Barr supports ending it.

I will grant, however, that Barr's performance on Fox was weak. He did a poor job in explaining what he meant by long term "restructuring."

The press release (that presumably got him the spot on Fox) was much better.

His statements on preventing default in the interview are roughly consistent with the position in the press release.

http://www.bobbarr2008.com/press/press-releases/56/bob-barr-says-privatize-fannie-mae-and-freddie-mac-end-government-subsidies/

I personally support a more gradual winding up of the firms rather than default, bankruptcy, and liquidation.

Here is Gerald O'Driscoll's statement from the Cato website:

http://www.cato.org/pressroom.php?display=ncomments&;id=83

Here is his statement in the WSJ

http://online.wsj.com/article/SB121607820954752561.html?mod=opinion_main_commentaries

Bill Woolsey - 7/18/2008

David, did you even read the press release?

"Bob Barr Says Privatize Fannie Mae and Freddie Mac, End Government Subsidies"

"Government must get out of the mortgage business, but must do so in a way that least harms taxpayers and the economy."

"However, the ultimate objective must be full privatization—with both organizations turned into private companies, responsible for their loan portfolios, "

"Finally, we must learn the lesson that government subsidy programs almost always end up running out of control, causing financial disaster for taxpayers. A Fannie Mae/Freddie Mac collapse could cost most than $1 trillion. The U.S. already has a $14 trillion national debt. Far worse, the unfunded liabilities of Social Security and Medicare top $100 trillion. American taxpayers cannot afford additional special interest subsidies and bail-outs."

"Moreover, the entire economy suffers from the sort of market manipulation practiced by Fannie Mae and Freddie Mac, as well as the multitude of direct housing subsidy programs. Indeed, the impact of the sub-prime lending crisis has gone far beyond the housing market. The largely unaccountable Federal Reserve has made many of these problems worse, by extending further bail-outs and creating additional taxpayer liabilities. Congress must limit the Fed’s activities as well, and force it to act with greater transparency and oversight."

Robert Higgs - 7/18/2008

Inasmuch as your vote cannot affect the outcome of the election, but can serve only as an expression of your ideological preferences, it seems to me to make no sense to vote for a candidate unless he does indeed represent one's ideological preferences. Barr would obviously be preferable to Obama or McCain, but Barr is not going to be elected. The only question, then, is whether one regards Barr's positions as meriting your support in the abstract via your act of expressive voting.

Allan Walstad - 7/17/2008

Bob (also David)--I'm inclined to agree that the government should just stay out of the mortgage problem now. But, are you saying that government should never seek to ameliorate problems that it has caused? I'm thinking of Social Security, for example--would you just abolish it, or would you allow for benefits to continue at some level to people relying on it, who after all didn't really have much choice about paying so much in?

It seems to me that when government causes problems, usually these are blamed on the market, or . At least Barr's pointing the blamefinger in the right direction.

I'm curious as to how you see Barr in relation to McCain and Obama (or McBama, as I'm coming to call them). Should I stay home from the polls this November, rater than vote for any of these guys? Or is a vote for Barr, with his shortcomings, still better than staying home?

David T. Beito - 7/17/2008

I agree. Barr completely ignores the historical and public choice consequences of supporting a bail-out. His position appears to be no better than McCain's.

Robert Higgs - 7/17/2008

Barr says that "because the government has caused this problem . . . it has to do something." Where, I wonder, did anyone get the idea that this man is a libertarian?

If libertarians favor anything, they favor making the existing government smaller. And most of them understand that the government's growth over the past century or more has followed a set of paths, each of which might be described by saying that the government caused a problem and then led people to believe that it had to do something to remedy that problem.