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Thomas Sowell
Thomas Sowell
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Solving Whose Problem?

Comment

No one will really understand politics until they understand that politicians are not trying to solve our problems. They are trying to solve their own problems— of which getting elected and re-elected are number one and number two. Whatever is number three is far behind.

Many of the things the government does that may seem stupid are not stupid at all, from the standpoint of the elected officials or bureaucrats who do these things.

The current economic downturn that has cost millions of people their jobs began with successive administrations of both parties pushing banks and other lenders to make mortgage loans to people whose incomes, credit history and inability or unwillingness to make a substantial down payment on a house made them bad risks.

Was that stupid? Not at all. The money that was being put at risk was not the politicians' money, and in most cases was not even the government's money. Moreover, the jobs that are being lost by the millions are not the politicians' jobs— and jobs in the government's bureaucracies are increasing.

No one pushed these reckless mortgage lending policies more than Congressman Barney Frank, who brushed aside warnings about risk, and said in 2003 that he wanted to "roll the dice" even more in the housing markets. But it would very rash to bet against Congressman Frank's getting re-elected in 2010.

After the cascade of economic disasters that began in the housing markets in 2006 and spread into the financial markets in Wall Street and even overseas, people in the private sector pulled back. Banks stopped making so many risky loans. Home buyers began buying homes they could afford, instead of going out on a limb with "creative"— and risky— financing schemes to buy homes that were beyond their means.

But politicians went directly in the opposite direction. In the name of "rescuing" the housing market, Congress passed laws enabling the Federal Housing Administration to insure more and bigger risky loans— loans where there is less than a 4 percent down payment.

A recent news story told of three young men who chipped in a total of $33,000 to buy a home in San Francisco that cost nearly a million dollars.

Why would a bank lend that kind of money to them on such a small down payment? Because the loan was insured by the Federal Housing Administration.

The bank wasn't taking any risk. If the three guys defaulted, the bank could always collect the money from the Federal Housing Administration. The only risk was to the taxpayers.

Does the Federal Housing Administration have unlimited money to bail out bad loans? Actually there have been so many defaults that the FHA's own reserves have dropped below where they are supposed to be. But not to worry. There will always be taxpayers, not to mention future generations to pay off the national debt.

Very few people are likely to connect the dots back to those members of Congress who voted for bigger mortgage guarantees and bailouts by the FHA. So the Congressmen's and the bureaucrats' jobs are safe, even if millions of other people's jobs are not.

Congressman Barney Frank is not about to cut back on risky mortgage loan guarantees by the FHA. He recently announced that he plans to introduce legislation to raise the limit on FHA loan guarantees even more.

Congressman Frank will make himself popular with people who get those loans and with banks that make these high-risk loans where they can pocket the profits and pass the risk on to the FHA.

So long as the taxpayers don't understand that all this political generosity and compassion are at their expense, Barney Frank is an odds-on favorite to get re-elected. The man is not stupid.

What is stupid is believing that politicians are trying to solve our problems, instead of theirs.

As for the FHA running low on money, that is not about to stop the gravy train, certainly not with an election coming up in 2010.

The Federal Deposit Insurance Corporation is also running low on money. But that is not going to stop them from insuring bank accounts up to a quarter of a million dollars. It would be stupid for them to stop with an election coming up in 2010.

To find out more about Thomas Sowell and read features by other Creators Syndicate columnists and cartoonists, visit the Creators Syndicate web page at www.creators.com. Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. His Web site is www.tsowell.com.

COPYRIGHT 2009 CREATORS.COM



Comments

3 Comments | Post Comment
I MUST ADD TO THE POINT THAT GETTNG ELECTED AND RE-ELECTED FOR MOST CONGRESSMEN DUE TO GERRYMANDERED DISTRICKS IS NOW LESS OF A CONCERN THAN PUTTING THIER SOCIALIST AGENDA IN PLACE AN IN EFFECT.
Comment: #1
Posted by: CLYDE
Tue Nov 24, 2009 7:24 PM
I couldn't agree more with your column concerning politicians' strategy for keeping their jobs. Isn't it time for taxpayers to demand term-limits for the Senate and the House?! If a politician knew he/she could serve only eight years, the focus might be more beneficial to taxpayers. How can we promote term-limits? Would it be a state referendum? Please feature this idea in your column. I believe that all honest taxpayers would support term-llimits for Congress.
Comment: #2
Posted by: S. Hawkins
Sat Nov 28, 2009 6:17 AM
Dear Thomas Sowell, Good Article! Latest article (11-29-09), NC Politicians on "Passage of Healthcare Reform and I'm quoting "it's been almost 100 years, since we first began talking about how to get to quality and affordable healthcare for all Americas. It's time we arrived!" REALLY! Since this 'healthcare rhetoric' has been around for 100 years, this has meant 'JOB SECURITY' for these corrupt and greedy ticks, so I guess Taxpayers will be hearing about healthcare for another 100 years, won't they, since politicians have bankrupted America, sold our jobs to foreign countries, there won't be any money to pay for their lavish lifestyle! But, then of course, politicians haven't thought about this, as long as the insurance and drug companies (& what few companies are left) continue supplying them with billions, they think they're on solid soil! Taxpayers feel it's time to 'TAKE AMERICA BACK!'
‘Lying' supposedly will get politicians impeached , then why hasn't ninety-five percent of
politicians been impeached? Lets' sell them a one-way ticket to Gitmo, take all their assets to pay off the
trillions they've borrowed without Taxpayers consent? Six decades later and America is bankrupt
with these ‘corrupt, greedy, lying bunch of ‘blood-sucking ticks', still in office, still drawing big
salaries and retirements, working on the same ‘programs/ healthcare' for years. They have nothing
better to do to justify the bigs bucks they steal from Taxpayers, as it's obvious none of them know
what they're doing nor care. This is why their favorite saying is “I'll check on this and get back to
you!” This brings another thought to Taxpayers minds, if the Insurance, Drug companies,
Hospitals, and Medical professionals stop ‘paying the politicians to run for office, maybe the
‘Politicians License to Steal' will come to a screeching halt!

Politicians take billions from insurance, drug companies, healthcare professionals and what few
businesses are left. This is why Taxpayers can't afford insurance, hospitals, let alone medications.
Passing of Healthcare is another POWER GRAB and will finish bankrupting America. Fraud and
bankrupting of social security, medicare and medicaid should tells folks that government run
programs have never worked for Taxpayers, just for Politicians!

Insurance and Drug companies should give their insured, that's paid them big bucks for years, all
their money back. Folks, the Taxpayer that's paid $200.00 to $750.00 monthly, would be entitled to
several million for each person. Just think, we wouldn't need them at all! What fools we've been
letting these ‘blood-sucking ticks' tell us that ‘Taxpayers have to spread the wealth around!'
Where is politicians ‘wealth they're spreading around?'

Why would politicians want to spend billions of dollars taken from insurance, drug, hospitals and
the small business owners, to run for an office that pays $200,000.00+-?

Comment: #3
Posted by: Shirley deLong
Sun Nov 29, 2009 12:12 PM
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