Topic: Government and Politics

The Coming FHA Bail-Out

The taxpayers continue to get hit for Uncle Sam’s profligate ways in guaranteeing and insuring loans to virtually anyone and everyone who wanted to buy a house.  The financial fall-out continues, and this time it isn’t Fannie Mae and Freddie Mac.  It is the Federal Housing Administration.

Reports the Wall Street Journal:

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.

The rising losses at the FHA, part of the U.S. Department of Housing and Urban Development, come as the agency has rapidly increased its role in guaranteeing loans in an attempt to stabilize the housing market.

It isn’t clear how the rising losses may affect home buyers. Options for the agency could include politically unpalatable choices, such as asking for taxpayer funds to boost reserves or increasing the premiums borrowers pay for the insurance offered by the agency. Agency officials say if there is a shortfall, they don’t have to do anything except report it to lawmakers. But some mortgage and housing analysts see trouble ahead. “They’re probably going to need a bailout at some point because they’re making loans in a riskier environment,” says Edward Pinto, a mortgage-industry consultant and former chief credit officer at Fannie Mae. “…I’ve never seen an entity successfully outrun a situation like this.”

Oh well, it’s only money.  When you have a national debt of nearly $12 trillion, face another $10 trillion in red ink over the next decade, and have accumulated $107 trillion in unfunded liabilities for Medicare and Social Security alone, what’s a few billion dollars more?

Contra the President, Americans Don’t Want Big Government

Although candidate Barack Obama presented a moderate face, as president he has pushed a program for expanding government control at most every turn.  And that agenda appears to be causing the rush of independents away from the Democrats.

According to political analyst Charlie Cook:

What’s going on? While political analysts were fixated on last fall’s campaign and on Obama’s victory, inauguration, and first 100 days in office, two other dynamics were developing. First, the worst economic crisis since the Great Depression scared many voters, making them worry about their future and that of their children and grandchildren. And the federal government’s failure to prevent that calamity fundamentally undermined the public’s already low confidence in government’s ability to solve problems. Washington’s unprecedented levels of intervention — at the end of Bush’s presidency and the start of Obama’s — into the private sector further unnerved the skittish public. People didn’t mind that the head of General Motors got fired. What frightened folks was that it was the federal government doing the firing.

Many conservatives predictably fear — and some downright oppose — any expansion of government. But late last year many moderates and independents who were already frightened about the economy began to fret that Washington was taking irreversible actions that would drive mountainous deficits higher. They worried that government was taking on far more than it could competently handle and far more than the country could afford. Against this backdrop, Obama’s agenda fanned fears that government was expanding too far, too fast. Before long, his strategy of letting Congress take the lead in formulating legislative proposals and thus prodding lawmakers to take ownership in their outcome caused his poll numbers on “strength” and “leadership” to plummet.

The Democrats still have plenty of time to revive their fortunes … by dropping plans to make an already huge government ever bigger.

Method to the Meandering

For Calvin Coolidge, one of our greatest presidents, reticence was both a personality trait and a political strategy.  As Coolidge told his Commerce secretary and successor, Herbert Hoover, “Nine-tenths of [visitors to the White House] want something they ought not to have.  If you keep dead still, they will run down in three or four minutes.”

It seems that Ronald Reagan,–an admirer of Coolidge’s who hung Silent Cal’s portrait in the Cabinet Room–adopted a similar strategy, though one more in keeping with Reagan’s gregarious persona.  Alas, Ted Kennedy, who recounted the story in his upcoming memoir, wasn’t sharp enough to figure out what was going on.  From an article on the Kennedy book in today’s New York Times:

[Senator Kennedy] said it had been difficult to get Reagan to focus on policy matters. He described a meeting with him that he and other senators had sought to press for shoe and textile import limits.

The senators were told that they would have just 30 minutes with the president. Reagan began the meeting, the book said, commenting on Mr. Kennedy’s shoes — asking if they were Bostonians — and then talking for 20 minutes about shoes and his experience selling shoes for his father. “Several of us began conspicuously to glance at our watches.” But to no avail. “And it was over!” Mr. Kennedy said. “No one got a word in about shoe or textile quota legislation.”
 

Huh. Go figure.

(For an introduction to Coolidge’s virtues, try John Derbyshire’s wonderfully strange and charming novel Seeing Calvin Coolidge in a Dream.)

Presidential Cults

Glenn Greenwald, author of Cato’s much-discussed paper on the success of drug decriminalization in Portugal, writes about cults of presidential personality. He notes that Jay Nordlinger of National Review and other conservatives – not to mention a few libertarians – have criticized the Obama administration’s plan to broadcast a presidential speech into American schools and push teachers to post Obama quotes in their classrooms and encourage students to talk about how President Obama inspires them.

Greenwald never actually defends the Obama plan. But he does argue that conservatives have short memories when they say that this is something unique. In particular, he reminds us of the notorious Monica Goodling’s questions to job candidates at the George W. Bush Department of Justice, such as “[W]hat is it about George W. Bush that makes you want to serve him?” And also of White House political aide Sara Taylor, who told the Senate Judiciary Committee, “I took an oath to the president, and I take that oath very seriously.” Committee chairman Patrick Leahy had to ask her, “Did you mean, perhaps, you took an oath to the Constitution?”

Greenwald has a good point. Both the red and blue teams have been far too quick to succumb to a cult of presidential personality. (And really, swooning over Reagan or Obama is sort of understandable. But George W. Bush? You have to wonder if they worked really hard at creating a Bush cult because there wasn’t really much there.)

But I do see one difference: The Obama administration is trying to push its president-worship onto 50 million captive schoolchildren (not to mention using the NEA to enlist the nation’s artists in promoting Obama and his agenda). Goodling was asking people looking for government jobs why they wanted to “serve George W. Bush.” Now, sure, they should want to serve the public interest – and she was asking these questions to people seeking career legal positions as well as to political appointees. Still, it seems a smaller bit of cultishness than going into every public school.

Gene Healy wrote about cultishness by both Bush and Obama supporters here.

DC Gun Regulations

A Washington Post reporter describes the rigmarole Washington D.C. residents must endure to purchase a gun and keep it in one’s home for purposes of self-defense. Snippet:

It took $833.69, a total of 15 hours 50 minutes, four trips to the Metropolitan Police Department, two background checks, a set of fingerprints, a five-hour class and a 20-question multiple-choice exam.

It’s a fair-minded article–not only about the government regulations, but also the factors that play into the decision to keep a gun–risk of crime, risk of accident, the personal willingness to use deadly force (not to mention getting approval from the spouse!)

Cato Chairman Bob Levy, the prime mover of the landmark Heller ruling, discusses the next legal fight: Whether one can carry a firearm outside of the home for purposes of self-defense. Tom Palmer is suing the DC government on this. For more on the Second Amendment and gun control, check out the new Cato book, Gun Control on Trial, by Brian Doherty.

Obama to Seek Cap on Federal Pay Raises

USA Today reports that President Obama is seeking a cap on federal pay raises:

President Obama urged Congress Monday to limit cost-of-living pay raises to 2% for 1.3 million federal employees in 2010, extending an income squeeze that has hit private workers and threatens Social Security recipients and even 401(k) investors.

…The president’s action comes when consumer prices have fallen 2.1% in the 12 months ending in July, because of a massive drop in energy prices. The recession has taken an even tougher toll on private-sector wages, which rose only 1.5% for the year ended in June — the lowest increase since the government started keeping track in 1980. Private-sector workers also have been subject to widespread layoffs and furloughs.

Last week, economist Chris Edwards discussed data from the Bureau of Economic research that revealed the large gap between the average pay of federal employees and private workers. His call to freeze federal pay “for a year or two” received attention and criticism, (FedSmith, GovExec, Federal Times, Matt Yglesias, Conor Clarke) to which he has responded.

As explained on CNN earlier this year, the pay gap between federal and private workers has been widening for some time now:

A Warning for President Obama

Last November’s rejection of the failed GOP didn’t mean voters were ready to embrace a massive increase in the size of the federal government, says Scott Keeter, director of survey research at Pew Research Center:

Obama campaigned for strong government action on the economy and health care, and most of his voters agreed with this direction. But Obama’s efforts to expand the role of government have alienated many of those who did not vote for him but nonetheless gave him high marks when first he took office.

Pew Research’s political values survey this spring showed no surge in public demand for more government. Indeed, anti-government sentiment, which had been building for years, was heightened by the financial bailout and stimulus program.