Tag: tea

Thursday Links

  • A few things you might not know about rail travel: “Automobiles in intercity travel are as energy efficient as Amtrak. Cars are getting more energy efficient, while boosting Amtrak trains to higher speeds will make them less energy efficient.” The list goes on…
  • Quiz Time! Which was the only country in the 27-nation European Union to register economic growth without going through a recession last year? The answer might surprise you.

Housing Bailouts: Lessons Not Learned

The housing boom and bust that occurred earlier in this decade resulted from efforts by Fannie Mae and Freddie Mac — the government sponsored enterprises with implicit backing from taxpayers — to extend mortgage credit to high-risk borrowers. This lending did not impose appropriate conditions on borrower income and assets, and it included loans with minimal down payments. We know how that turned out.

Did U.S. policymakers learn their lessons from this debacle and stop subsidizing mortgage lending to risky borrowers? NO. Instead, the Federal Housing Authority lept into the breach:

The FHA insures private lenders against defaults on certain home mortgages, an inducement to make such loans. Insurance from the New Deal-era agency has enabled lending to buyers who can’t make a big down payment or who want to refinance but have little equity. Most private lenders have sharply curtailed credit to those borrowers.

In the past two years, the number of loans insured by the FHA has soared and its market share reached 23% in the second quarter, up from 2.7% in 2006, according to Inside Mortgage Finance. FHA-backed loans outstanding totaled $429 billion in fiscal 2008, a number projected to hit $627 billion this year.

And what is the result of this surge in FHA insurance?

The Federal Housing Administration, hit by increasing mortgage-related losses, is in danger of seeing its reserves fall below the level demanded by Congress, according to government officials, in a development that could raise concerns about whether the agency needs a taxpayer bailout.

This is madness. Repeat after me: TANSTAAFL (There ain’t no such thing as a free lunch).

C/P Libertarianism, from A to Z

New at Cato

Here are a few highlights from Cato Today, a daily email from the Cato Institute. You can subscribe here.

  • Scott Lincicome discusses how the Obama administration has put U.S. leadership in free trade in jeopardy.
  • Ted Galen Carpenter discusses President Obama’s recent trip to Mexico to meet with President Felipe Calderon.
  • Appearing on PBS, Cato Chairman Robert A. Levy debates the state of American gun laws.
  • In today’s Cato Daily Podcast, John Samples discusses what the “Tea Party” protests mean for the GOP.

The Tea Parties

There hasn’t been much here on the Cato blog about the Tea Parties this week, so I thought I should write a bit about them.

A number of sources report around 750 individual events across the country, from small towns to big cities. Hundreds of thousands of people attended.

Many if not the vast majority of these people do not go to protests or even political rallies. My parents, who sent along the pictures below of the large rally in Cincinnati, do not do big crowds or political events. Neither do many of their friends. But they were there.

The general tenor and talk were non-partisan — people are angry at both political parties for many of the same reasons: spending, growth of government, and the ever-expanding reach of federal involvement in every aspect of our lives.

It’s not just the first months of the Obama presidency that produced this reaction among normal citizens who have never before come out for political protests. The frustration on display has been building for years under Republican control. The last sad gasp of the Bush administration bailouts and the explosion of previously inconceivable spending under a Democrat-controlled government have simply pushed many common citizens well past passivity.

It’s not about party. It’s about freedom and responsibility.

These Tea Parties won’t change anything, but they are an ominous sign for our political class and a heartening one for the future. Citizens are drawing strength and encouragement from the events that could translate into voting and political action that brings real change, not just a doubling-down on failed policy.

Hope springs eternal …

Tax Day

Fox News and MSNBC are having fun with the taxpayer tea party protests today. Fox News is playing up the protests, while MSNBC hosts are making jokes about “tea-bagging,” while pretending that the protests were all orchestrated by Sean Hannity. I’ll be attending the protests in D.C. today, and I’m hoping that the message isn’t just anti-Obama because the Republicans are every bit as guilty as the Democrats for the government’s fiscal mess.

MSNBC hosts who think that the colonists didn’t mind taxes, but were just upset about the “without representation” part, should read Alvin Rabushka’s massive tax history leading up to 1776, Taxation in Colonial America.

Doing my taxes last night, I asked my twins (age 5 1/2): “If Mommy and Daddy had $100, how much should we give to the government?” One twin said “5” and the other said “10,” so they are off to good start on understanding limited government. Mommy reminded the kids that the government provides useful services such as fire and police, but the kids were comfortable with their answers.

I would footnote that state/local fire, police, and corrections spending amounts to just 4 percent of total government spending in the United States.