Catastrophe - Dick Morris [45]
The latest indications from Congress are that this bill may be in trouble. The Republicans oppose it (they’re wrong on this one) but so do a lot of Democrats. Why? Because they are all in hock to the mortgage lenders who have showered them with campaign contributions.
So Obama’s rescue plan won’t help most homeowners who need it and the Congress looks unlikely to pass the only way to get them real relief because the special interests won’t let it do so.
Obama, of course, knows the shortcomings of his plan. He realizes, obviously, that there are huge gaps. He hinted as much when he cautioned that his plan “will not save every home”152—another memorable understatement.
So why won’t he take more dramatic steps to end the crisis? During the campaign, he repeatedly bemoaned the pain families must feel at losing their homes, his words dripping with empathy. After the Iraq War turned around, those very foreclosures became the single most important issue in his campaign. So why doesn’t he propose a real solution?
Because he’s caught in the classic liberal Democrat predicament. If he steps in, buys the mortgages, and then cuts a good deal with the families, letting them stay in their homes without facing foreclosure or eviction, he could alleviate all the current pain. But it would come at a steep price.
What happens if the family breadwinner loses his or her job in the interim? Or has already lost the job? Is the federal government going to throw families out of their homes? Not very likely.
And then, when the economy improves and home values rebound, what if the current occupants refuse to buy back their homes at a reasonable market price? How are the taxpayers to recoup their money? Again, Washington would face the prospect of throwing people out of their homes.
The minute the liberal Democrats forced Fannie and Freddie to buy and insure mortgage loans to people who probably couldn’t pay them, they set up the ultimate problem: In a democracy, how can the government evict people from their homes?
The answer is, of course, that it won’t. As a result, taking over these mortgages now would mean setting up a kind of permanent government housing project for these families, keeping them in their homes at a substantial subsidy rather than evicting them and getting a fair market price for the property. These subsidized houses could sit out there for decades, a permanent drain on the economy; one can only imagine how hard some enterprising heirs might fight to hang onto those deal-of-the-century homes, trying to prolong the subsidy for generations to come.
By offering such a phony mortgage plan, Obama has, in effect, punted on the problem, letting the bankruptcy courts sort out the bad loans on a case-by-case basis. Let the judicial system order people out of their homes; the government’s not about to get its hands dirty.
That’s what judges are for.
4
OBAMA’S HEALTH CARE CATASTROPHE
When Barack Obama talks about health care reform, it seems as if all the news is good news. His program, he tells us, will cover 47 million people who now don’t have insurance. It will lower costs for the rest of us by $2,500 annually. It will improve the quality and efficiency of the care we get. It will focus particularly on chronic illnesses to improve the management of our treatment. It will restore American competitiveness by lowering the cost of health care.
And, increasingly, Obama is fond of linking health care reform to the rescue of the economy (never let a good crisis go to waste!).
As CNN reported, in one speech “President Obama pledged…to cure Americans from what he called ‘the crushing cost of health care,’ saying the country could not afford to put health-care reform on hold. ‘This is a cost,’ he noted, ‘that now causes a bankruptcy in America every thirty seconds.’ He said that it would cause 1.5