What Is It About 'No Free Lunch' That Obama Doesn't Understand?

· Friday, February 3, 2012

Obama's latest homeowner mortgage relief plan is perfect for him: It both is consistent with his ideology -- duh -- and allows him to buy more votes with someone else's money, all the while pretending there is in fact such a thing as a free lunch.

The painfully superficial liberal approach to poverty gets old, as does its corollary tenet that conservatives who reject liberals' failed ideas lack compassion. Indeed, Obama seemed to devote half the words in his prayer breakfast speech to proving that Scripture compels liberal policies.

Obama's latest proof that he cares more than we do is his proposal to "give every responsible homeowner in America a chance to save about $3,000 a year on their mortgage by refinancing at historically low rates. No more red tape. No more runaround from the banks."

This has all the elements. He frames the program as applying only to responsible mortgagors; he personally gets credit for handing out this money from his legendary "stash"; government, not the market, dictates what the interest rate will be; government will wave its magic wand forbidding "red tape" and bureaucratic obstacles; and banks, one of his favorite targets, are demonized and lined up to be punished.

But haven't we had enough of this man's top-down manipulation of the market in the guise of helping people? Is he ever to be held accountable for similar failed programs he's already tried? How about that $75 billion mortgage relief plan he implemented in 2009? You know, the one he said would "give millions of families resigned to financial ruin a chance to rebuild"? The one he said would save 7 million to 9 million mortgages.

Well, The New York Times reported in January 2010 that the plan had "been widely pronounced a disappointment." And "some economists and real estate experts," the Times went on, "now contend it has done more harm than good." By June 2010, more than a third of the 1.24 million borrowers who had enrolled in the mortgage bailout program had already dropped out. Nevertheless, the administration pressed forward, in complete denial that the program was failing and that the administration should be accountable. It cared, after all.

But if you buy your kid a car or give him a sweetheart loan to help him purchase one and he gets drunk and wrecks it, do you immediately buy him a new, more expensive one?

Moreover, is Obama ever to be held accountable for his entire range of economic policies that have grossly exacerbated our economic malaise and suppressed any chance of a real recovery?

If he would just get his Keynesian boot off the accelerator, quit spending money as if he were a perpetual lottery winner, stop enacting regulations to punish businesses, get behind capital gains and corporate income tax relief, stop showering recklessly wasteful "renewable and clean" energy projects with money as if he were a bitter spouse trying to bankrupt her cheating husband, and end his crusade against tried-and-tested domestic sources of energy, the economy would recover and we wouldn't have so many homeowners with upside-down mortgages to worry about. But why do all that when you can still blame Bush?

Did Obama accept responsibility for his 2009 mortgage relief plan? Of course not. He brags about it. He fails to mention his promise to save 7 million to 9 million mortgages and boasts that he's helped nearly 1 million of them, itself a dubious figure. There's no "I'm sorry it was a miserable failure," but rather "trust me to throw something else against the wall" -- reminiscent of his high-speed rail mantra.

His new plan is terribly flawed. It'll probably win him votes, but it wouldn't do anything for the ailing housing market or the overall economy and would probably hurt them. The Cato Institute's Mark Calabria debunks the idea that reducing homeowners' mortgage payments would be "a no-cost stimulus." It might give homeowners more money to spend, but it would drive down payments on mortgages and mortgage-backed securities, so mortgage investors would reduce their spending, making the net effect a wash. It would also redistribute money, regressively, from some taxpayers to homeowners and from retirees to younger homeowners. Nor would the arbitrary fee to be imposed on the evil banks be without consequences because it would reduce bank equity and thus new lending, hurting potential borrowers by reducing available credit. The plan could also reduce future home prices.

So we have a cavalier president proposing, again (remember the GM and Chrysler restructurings), to alter the terms of existing contracts to the detriment of one of the contracting parties, illegally and unconstitutionally, as if lawmakers' allegedly good intentions exempt them.

This plan moves beyond class warfare rhetoric into class warfare policy. The administration is not teaching people to fish but is stealing fish from others and giving it to them. It will not work, and it will further damage our hopes for a sustained recovery.

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Comments

Sam K

"...as if he were a perpetual lottery winner..."

The simile may be clunky and contrived, but, Mr. Limbaugh, I can empathize with how difficult it is to come up with a metaphor to illustrate the obscene rate at which Obama spends money that does not exist. There is simply no way to capture the magnitude of the numbers.

A man could win the lottery every day of every week of every month of every year for the rest of his life, and it would take him two centuries just to cover the federal debt as it is now. A legion of perpetual lottery winners could not spend money on the scope that the government does.

The English language simply does not offer us the means to explain what numbers like 'trillion' mean, numbers so big that you could go your entire life without ever using them. I have never known a writer good enough to capture the mind-boggling scope of those numbers in a single metaphor. You made a valiant effort, Mr. Limbaugh.

Posted February 3, 2012 at 10:35:10 AM


Holmes Simons

There you go again trying to fit a square, lying, radical Socialist into the round hole of American values.

STOP IT! I'm sick of it!

Be a man, a patriotic American, for once. Stand up and proclaim Truth - that Obama only implements policies that advance his agenda to fundamentally transform America into whatever ungodly form of governance that will benefit his ego and his supporters’ pocketbooks. He cares not for the People, rich or poor, black or white. He is an ideologue with no inclination to try to enact policies beneficial to this Country. Three years of his bullcrap isn’t enough for you to understand his methodology? God help us.

His new plan is not “terribly flawed”. It is precisely directed at his primary goal, subversion of our Constitutional Republic.

WISE UP!

Posted February 3, 2012 at 10:46:57 AM


wjmccrindle

Chairman Obamao is implementing the Cloward Piven stragey, where he spends us into a total colapse. He needs a second term to complete the destruction, totally colapse our finacial system, get the dollar so worthless it is replaced by some other currency, and then use the crisis to declare his dictatorship. He is following the Nazi playbook of Hitler, taking over control of business, regulating outside of congress through executive orders and Czars. A vote for a Democrat is tantamount to treason. This fall we must ensure the traitors are removed from office, or the Country is doomed.

Posted February 3, 2012 at 11:18:06 AM


Mark S

I don't know why these columnists write articles like this that attempt to portray Obama as if he is merely incompetent, doesn't know what he's doing, or is otherwise adhering to failed liberal ideology.

This dude is a Marxist. He vowed to "fundamentally transform the United States of America." His actions tell of this at every turn.

Unless and until we can get our collective heads out of our rectal cavities and use our voices to call fecal matter what it is, we are doomed.

But I fear it may already be too late as evidenced by the cricket-chirping silence by any other elected officials to even bring up the topic of impeachment for all the unconstitutional things this sicko has already undertaken. Seems more and more a massive plot with both Republicans and Democrats joined at the hip.

Now, David, why not use your powerful pen to pursue this line?

Posted February 3, 2012 at 11:31:11 AM


JAC

No one has mentioned one of the constraints of the Chicago Cockroach's mortgage program: the minimum mortgage amount is $257K. In many parts of the country, that's a very expensive or at least an upper level house. I'd like to see what percentage of people whose homes are "under water" have a value of less than the minimum for the program--like my stepmother, whose $80K mortgage is for a home now worth $60K. I'd bet my next month's salary that the percentage of people who don't qualify for Obozo's program exceeds those who do.

Posted February 3, 2012 at 1:30:16 PM


rippedchef

Although its great to come hear and see opinions mostly the same as mine,I wonder if we shouldn't spend our time at Huffpost or some other liberal board trying to educate these morons.I have lately and am amazed at the lunacy I encounter-HELP those who are so much more eloquent than I

Posted February 3, 2012 at 4:41:36 PM


Abu Nudnik

They're right, Jonah, the commenters above who say that Obama is not incompetent but has values hostile to the republic.

"The Constitution is fundamentally flawed," he said in a radio interview, "in that it only tells governments, state [sic] and federal, what it can't do *to* you. It doesn't say what it must do *for* you."

In other words the Constitution is not flawed in some small way that tinkering would fix but in its essence - by limiting the power of government.

He is not incompetent. He believes in totalitarian government. The founders felt differently. They felt that man needs government and that the governors must be governed too. "[B]ind him down from mischief by the chains of the Constitution," said Jefferson. Yet Obama has installed a Supreme Court Justice who says she believes, not in the Constitution of Jefferson but of Thurgood Marshall. And that's the second threat to the Constitution: the "tyrannical branch."

"I will get my jobs bill passed with or without Congress." No need to burn a Reichstag if Congress is composed of cowards too stupid to recognize the usurpation of their Constitutional responsibilities. But, being irresponsible themselves and not knowing how to stop drinking they agree they need more money for more booze. Obama can take the blame.

And the voters? Who are selling their souls? The blame belongs to everyone.

The Romans feared (wisely) "the one, the few, the many." Each had its own danger. Today we have a tyrant, a tyrannical branch and a cowardly branch. And a tipping point of bribes citizens with junk up their arms.

This is a bad reality show.

Posted February 4, 2012 at 12:16:37 PM


Patriot LE

@Sam K - Just to put 'trillion' into perspective: If you were to spend $1 million a day (that is to actively spend one million dollars, per day), it would take you over two and a half years to spend $1 billon... At the same rate (one million spent per DAY), it would take you 2,740 years, give or take a few months, to spend $1 trillion dollars... Mind-boggling doesn't begin to describe it...

Posted February 7, 2012 at 3:13:55 AM


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