We’re often told that if something sounds too good to be true, it probably is.
That’s definitely the case with the President’s new housing plan, which he has been pushing lately along with allies Robert Menendez (D-NJ) and Barbara Boxer (D-CA) in the Senate.
Supporters argue that by making just a few tweaks in the mortgage markets, they can help up to 3 million homeowners refinance at today’s low mortgage rates. This, they claim, will save the average person $3,000 per year—all at no cost to taxpayers.
What they’re conveniently forgetting is that whenever the feds step in and rewrite mortgage contracts to favor homeowners, those on the other side of the contract (investors) get hurt. And it’s not just “fat cat” bankers that face losses, but pension funds, money market accounts, and mutual funds, too—where middle class Americans put away savings to buy that new house or fund their retirement.
Taxpayers will also be hit hard because the Federal Reserve, Fannie Mae, Freddie Mac, and state and local governments are likewise big investors in these mortgage contracts. In other words, as with all government “stimulus” programs, this one will fail because the government can’t create new money in the economy out of thin air. Instead, they just shift it around (inefficiently, we might add).
Even if you buy the “stimulus” argument, past experience shows us this plan will do little good. This would be the President’s sixteenth attempt to fix the housing markets since he started tinkering in March 2009. Nearly all of those programs had underwhelming results, and house prices have actually continued to fall since that time.
When will the President and his friends on the Left realize that the best path forward is to get the government out of the way and let the housing market heal?
Take action today: Tell Congress you’re tired of housing bailouts!
Read more: Americans for Prosperity’s letter of opposition to S.3085.
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