My Two Cents - "Housing Bill - Action Required"
7/25/2008
This week, the US Congress overwhelmingly passed HR3221. Perhaps as early as today, this measure will be taken up in the Senate. The President has pledged his blessing of the measure as well. While I am sure that there are many folks who are happy to see this relief package, I am not one of them. Touted as cornerstones of this bill are tax credits for first-time homebuyers and reduced property taxes for select others. However, this is just window dressing. Potential recipients of the ‘benefits’ of this package must understand that they are not getting anything for free. What is given to the left hand will be taken from the right perhaps through higher taxes or perhaps through inflation. Most likely, though, it will be both.
I am including below a letter I’ve written to my two US Senators on this issue which lays out what I believe are the important aspects of this bill.
Dear Sir,
I am writing to you regarding the recent passage of HR 3221 this week otherwise known as the American Housing Rescue and Foreclosure Prevention Act of 2008. This bill passed the US House of Representatives by an overwhelming margin of 272-152 and will soon be taken up by the Senate; perhaps as early as today.
While based on its title and the explanations given in our biased media this would seem to be a bill loaded with good tidings for all, further examination reveals that it is anything but. The major highlights of this bill are as follows:
-The bill extends the statutory national debt ceiling by another $800 billion. Given Congress’ prior record, I am sure this gap will be filled rather quickly. This also sends a very clear signal that the situation will require far greater sums of money than we are being led to believe.
-The bill extends to the US Treasury carte blanche to purchase GSE debt, particularly that of Fannie Mae/Freddie Mac. Our elected Congress will no longer control the purse strings; rather they will be controlled by unelected, unaccountable political appointees. These two GSE’s own or guarantee a good portion of the $12 Trillion US residential mortgage market. This bill paves the way for the US Treasury to put American taxpayers on the hook for as much bad debt as Fannie and Freddie can come up with.
-The bill requires that all workers in the mortgage industry be fingerprinted. Frankly, I cannot see how fingerprinting anyone would have prevented this mess. This measure falls under the category of encroachments to our civil liberties buried in politically pleasing pieces of legislation. By and large the media failed to mention this provision of the bill.
-The bill also requires that all credit card transactions be reported to the IRS. What part of ‘secure in their homes, papers, and possessions’ didn’t the authors of this egregious measure understand? And what has this got to do with housing anyway?
It is my every intention to make the 2008 election a referendum on the sorts of policies that seek to rob American taxpayers of their hard earned money to bail out all manner of irresponsible financial transactions. Continuing to offload the problems of the US financial system onto future generations is not acceptable. Continuing to pile the liabilities of a Congress drunk on spending money onto future generations is not acceptable. And perhaps most importantly, sneaking provisions into these feel-good pieces of legislation that further strip Americans of their most basic God given rights is also unacceptable.
As Senators, you will have the opportunity to do the right thing at some point in the very near future and doom forever this vile piece of legislation to the recycling bin. Common sense strongly suggests it. The Constitution of the United States demands it.
Sincerely,
Andrew W. Sutton
Before you do anything else this weekend, I urge you to take 5 minutes and write your Senators about this. I am providing a link to the Senate Directory at the end of this dispatch. Use my letter if you want. Take my name out and put yours in if you agree with me. Use it however you wish. I ask for neither credit, nor recognition. It is far more important that this message gets out. Those who support this and similar legislation must be put on notice. We cannot afford to wait any longer. Our children are already on the hook for a bill that grows by $3 Billion each day. The time for meaningless partisan bickering has passed; the time for meaningful, concerted action has begun. This is not a Democrat/Republican issue, but an issue of freedom. Being saddled with debt which was brought about by unmitigated greed is not freedom. Being fingerprinted because you work for a mortgage broker is not freedom. Having every credit card transaction you conduct logged and reported to the IRS is not freedom. Giving unelected, unaccountable political appointees the power to burden our sons and daughters with trillions of dollars of debt is not freedom.
Today, please make your voices heard. If you don’t, the bailouts will most assuredly get bigger as this ongoing crisis continues to unfold.
Link to United States Senators by State
Until Next Time,
Graham Mehl is a pseudonym. He is not an ‘insider’. He is required to use a pseudonym by the policies of his firm when releasing written work for public consumption. Although not an insider, he is astonishingly bright, having received an MBA with highest honors from the Wharton Business School at the University of Pennsylvania. He has also worked as an analyst for hedge funds and one G7 level central bank.
Andy Sutton is a research and freelance Economist. He received international honors for his work in economics at the graduate level and currently teaches high school business. Among his current research work is identifying the line in the sand where economies crumble due to extraneous debt through the use of economic modelling. His focus is also educating young people about the science of Economics using an evidence-based approach.