Aug 22, 2004
Bush's Latest Compassion Conservative Fraud
Barron's ran a piece of mine this week thumping Bush's mortgage downpayment nonsense. Reading about this program has honestly left me tottering on the edge of cynicism.
http://online.barrons.com/article_print/SB109293948636396212.html (WSJ subscribers only, unfortunately)
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ONE OF THE PROUDEST ELEMENTS of President Bush's "compassionate conservative" agenda has been government financial support to home buyers for down payments. Bush is determined to end the bias against people who want to buy a home but don't have any money. But he is exposing taxpayers to tens of billions of dollars of possible losses, luring thousands of moderate-income families into bankruptcy, and risking the destruction of entire neighborhoods.
Congress passed Bush's American Dream Downpayment Act last fall. It authorizes federal handouts to first-time home buyers of up to $10,000 or 6% of the home's purchase price, whichever is greater, to anyone with income 20% less than their local median income. In San Francisco, where the median income is more than $113,300, a family of four with an income of up to $90,500 is eligible for this freebie.
Down-payment handouts are now part of building up the American character. Bush proclaimed on June 16, 2003: "Homeownership is more than just a symbol of the American dream; it is an important part of our way of life. Core American values of individuality, thrift, responsibility, and self-reliance are embodied in homeownership."
Is individuality something that the Feds have any competence to try to mass produce?
Is thrift something which can be fertilized with billions of additional dollars of deficit spending?
Is responsibility something which can be maximized through political grandstanding?
Is self-reliance so wonderful that the government should subsidize it?
....
President Bush's policies are pouring fuel on a fire that is already ravaging many neighborhoods in the U.S. While the percentage of Americans who own homes has risen in recent years, the foreclosure rate is rising much faster, tripling since the early 1980s. The percentage of FHA single-family home loans that have defaulted rose 54% between 1999 and 2002, reaching 4.25%. Payments on roughly 12% percent of all FHA mortgages are past due. Millions of American homeowners are at risk of sustaining collateral damage from this debacle.
These down-payment initiatives are key planks in the Bush re-election campaign. Bush will get the applause and political credit now, while the defaults from the program will not surge until sometime after November 2004.
Transferring the risk of homeownership from buyers to taxpayers does not endow virtue in America. Giving people a handout that leads them to financial ruin is wrecking-ball benevolence.
Rather than boosting the number of people dependent on government for a roof over their heads, the Bush administration should devote its energy to dismantling HUD, the biggest single blight on urban America.
http://online.barrons.com/article_print/SB109293948636396212.html (WSJ subscribers only, unfortunately)
***
ONE OF THE PROUDEST ELEMENTS of President Bush's "compassionate conservative" agenda has been government financial support to home buyers for down payments. Bush is determined to end the bias against people who want to buy a home but don't have any money. But he is exposing taxpayers to tens of billions of dollars of possible losses, luring thousands of moderate-income families into bankruptcy, and risking the destruction of entire neighborhoods.
Congress passed Bush's American Dream Downpayment Act last fall. It authorizes federal handouts to first-time home buyers of up to $10,000 or 6% of the home's purchase price, whichever is greater, to anyone with income 20% less than their local median income. In San Francisco, where the median income is more than $113,300, a family of four with an income of up to $90,500 is eligible for this freebie.
Down-payment handouts are now part of building up the American character. Bush proclaimed on June 16, 2003: "Homeownership is more than just a symbol of the American dream; it is an important part of our way of life. Core American values of individuality, thrift, responsibility, and self-reliance are embodied in homeownership."
Is individuality something that the Feds have any competence to try to mass produce?
Is thrift something which can be fertilized with billions of additional dollars of deficit spending?
Is responsibility something which can be maximized through political grandstanding?
Is self-reliance so wonderful that the government should subsidize it?
....
President Bush's policies are pouring fuel on a fire that is already ravaging many neighborhoods in the U.S. While the percentage of Americans who own homes has risen in recent years, the foreclosure rate is rising much faster, tripling since the early 1980s. The percentage of FHA single-family home loans that have defaulted rose 54% between 1999 and 2002, reaching 4.25%. Payments on roughly 12% percent of all FHA mortgages are past due. Millions of American homeowners are at risk of sustaining collateral damage from this debacle.
These down-payment initiatives are key planks in the Bush re-election campaign. Bush will get the applause and political credit now, while the defaults from the program will not surge until sometime after November 2004.
Transferring the risk of homeownership from buyers to taxpayers does not endow virtue in America. Giving people a handout that leads them to financial ruin is wrecking-ball benevolence.
Rather than boosting the number of people dependent on government for a roof over their heads, the Bush administration should devote its energy to dismantling HUD, the biggest single blight on urban America.