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Republicans Subsidize Mansions - The GOP is missing its chance to stand for limited government.
NATIONAL REVIEW ONLINE ^ | November 26, 2011 | Andrew C. McCarthy

Posted on 11/27/2011 6:43:19 PM PST by neverdem

Republicans Subsidize Mansions
The GOP is missing its chance to stand for limited government.

Almost two weeks ago, when they figured no one was watching, the Republican-dominated House of Representatives, by an overwhelming 292–121 margin, voted to increase funding for the Federal Housing Administration. Just as government debt hit $15 trillion, edging closer to 100 percent of GDP, these self-proclaimed scourges of spending decided Uncle Sam should continue subsidizing mini-mansion mortgage loans — up to nearly three-quarters of a million dollars.  

Given the straits that the mortgage crisis has left us in, to say nothing of the government’s central role in getting us there, one might think Republicans would be asking whether the government should be in the housing business at all. “Stop out-of-control spending and reduce the size of government” — that is what Boehner, Cantor, & Co. promised in big bold letters during the 2010 campaign. That was in the snippets of text that occasionally interrupted the gauzy photo spread they called their “Pledge to America.”

Instead, here we are a year later, careering toward the cliff. We ought to be doing everything in our power to tee up the 2012 election as a high-noon showdown between Obama’s insatiable Leviathan and a GOP vision of fiscally sane, constitutional conservatism. So how do Republicans respond to their moment? How do they propose to “stop out-of-control spending and reduce the size of government”? Why, by putting taxpayers on the hook for shaky loans on luxury homes — sure to add prodigiously to the already $142 billion (and counting) housing bailout attributable to Fannie Mae and Freddie Mac.

Not housing for the poor, mind you, nor even for the middle-class — luxury homes. The real-estate market is so depressed at the moment that the median sale price of a single-family home is less than $170,000. Even in high-cost areas like Los Angeles, the Wall Street Journal reports, it has plunged to less than $325,000. Yet the Republican House — installed by the Tea Party in a sea-change election to be the antidote to Obamanomics — decided the taxpayers should guarantee FHA loans up to $729,750. Had they not acted, the public obligation would have been reduced to “only” $625,500 per FHA loan — couldn’t have that, right?

Most every sensible person realizes the housing market will never recover until it is allowed to bottom out — meaning no more price supports, period. Yet, thanks to Republican leadership, the FHA marches on, under the Fannie/Freddie radar. As the Journal’s editors elaborate, though the agency now guarantees a whopping $1.1 trillion, its capital reserve against this astronomical liability is $2.6 billion — too small to be considered even a pittance. Leave aside that this is illegal: It’s less than an eighth of the meager 2 percent reserve federal law requires. The reserve amounts to a leverage ratio of 422:1, a metric by which, the Journal editors quip, Lehman Brothers was comparatively “risk-averse.” With GOP at the helm, the ratio is up over a thousand percent since the salad days of 2009, when it was a more Lehman-like 33:1.

In their pre-election pledge, Republicans promised to “End Government Control of Fannie Mae and Freddie Mac.” They explained that the government-backed mortgage giants had “triggered the financial meltdown by giving too many high risk loans to people who couldn’t afford them.” GOP leaders thus committed to “ending [Fannie and Freddie’s] government takeover, shrinking their portfolios, and establishing minimum capital standards,” which they projected would save $30 billion.

Sure. Let’s put aside that Fan and Fred are still open for business — and structuring executive bonuses to rise in direct proportion with taxpayer bailout tabs. The pledge studiously avoided mention of the FHA. Now, thanks to GOP leadership’s good offices, this government mortgage guarantor now sports expanding portfolios, capital reserves acknowledged only in the breach, and the potential for hundreds of billions of dollars in losses. As the Journal notes, FHA loan down-payments can be as low as 3.5 percent — at a time when market conditions have prudent lenders insisting on 20 percent.

The FHA debacle and the excellent WSJ editorial about it were hard to forget this week when the vaunted deficit “supercommittee” — another joint Obama-GOP soap opera — collapsed in failure. Unlike Journal editors and maverick senators, a number of us Hobbits alwaysthought the debt-ceiling deal from which sprang the supercommittee was pathetic: It enabled President Obama to incur staggering new debt for a nation already drowning in red ink without any meaningful reduction in spending. But the Journal’s postmortem was truly rich.

The editors dismiss as a “Beltway fable” the Democratic talking point that the supercommittee flopped because of GOP resistance to tax increases. True enough, but then they counter with a Beltway fable of their own: to wit, the real problem is that “the two parties disagree profoundly on a vision of government. Democrats don’t believe they need to do more than tinker around the edges of the entitlement state while raising taxes on the rich. Republicans think the growth of government is unsustainable and can’t be financed no matter how much taxes are raised.”

In truth, the two parties are largely in agreement: The blob must grow. Yes, Obama Democrats want to grow it by about $6 trillion over the next decade, but Republicans are nearly as bad. Writing with Reason editor Nick Gillespie, NRO Cornerite Veronique de Rugy points out that the GOP would grow it by close to $5 trillion — a 30 percent increase.  

That is under the plan proposed by Rep. Paul Ryan, the Republican budget pioneer who has won glowing praise in GOP leadership circles for daring to notice that we might be running out of other people’s money. Indeed, Newt Gingich, resurgent contender for the Republican presidential nomination, nearly derailed his campaign in its first mile by referring to the Ryan plan as “right-wing social engineering” — a gaffe he has sought to explain by stressing the need to grow public consensus before proposing something so tectonic.

Was it that good for you? I didn’t feel the earth move.

Don’t get me wrong. I like Representative Ryan. I wish he had run for president. I think he’d have won going away. Of all the stars in the GOP firmament — fellow supporters of TARP, and Keynesian economic stimulus, and the prescription-drug entitlement, and the bailout of GM and Chrysler, and . . . and . . . and — Ryan is the most likely to evolve into something like Reagan: the deep thinker humble enough to see the light and attractively confident enough to convince the country of what must be done.

But whether it is Ryan or somebody else, that evolution better happen in a hurry. In 2000, the last of the Clinton years, government spending was 18.2 percent of GDP. Obama has us at a 25 percent, but it’s only by that preposterous measure that Ryan’s proposal of 20.5 percent seems tame. In reality, the GOP proposes runaway spending that will get us to the same place — ruin — only slightly slower.

If Republicans really thought the growth of government was unsustainable, they’d stop growing it. As it is, the truly profound difference on “a vision of government” is between those who believe that government “growth” is unsustainable versus those who realize that government is unsustainable as is — those who grasp that throwing untold billions at Baby Boomer palaces is not compassion; it is the grandest of larceny, robbing our children and grandchildren of the chance for prosperity our forebears laid down their lives to preserve for us.

It was only a decade ago that we were getting by on 18.2 percent of GDP, and only about half a decade ago that a $400 billion annual deficit (about a trillion less than what we’re running now) was considered unconscionable. Where are the Republicans who are going to tell us how we get back to that?

The country is on a suicide course. This is not a time to be asking how, with a snip here and there, we trim our way to another $5 trillion down the sink-hole. Every GOP presidential candidate ought to be grilled: How much more than 18 percent of GDP (nearly $3 trillion) do you claim that the government needs to take from us and spend? What departments and tasks currently performed by the government will you shut down and abandon in order to get there? What do you plan to do when interest rates rise to historical norms (or, more likely, beyond) and the cost of further borrowing and debt service ravages the budget?

Obama Democrats demagogue about the need to balance spending cuts with tax hikes. Republicans predictably respond that they were willing to compromise. When you are $15 trillion in debt, a debate over whether we should borrow another $6 trillion or another $5 trillion is not an exercise in compromise. It is an exercise in insanity.

— Andrew C. McCarthy, a senior fellow at the National Review Institute, is the author, most recently, of The Grand Jihad: How Islam and the Left Sabotage America.



TOPICS: Business/Economy; Crime/Corruption; Editorial; Politics/Elections
KEYWORDS: andymccarthy; hr2112; mortgages
President Signs Bill Extending FHA, VA Loan Limits, Hitting GSEs with Fee

House roll call vote for H.R. 2112

Senate roll call vote for H.R. 2112

With rare exceptions because it might help a rat get elected in the general election, pubbies voting for this nonsense should be primaried!

1 posted on 11/27/2011 6:43:27 PM PST by neverdem
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To: neverdem
 

"Oops"
 

2 posted on 11/27/2011 6:49:04 PM PST by LomanBill (Animals! The DemocRats blew up the windmill with an Acorn!)
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To: neverdem
I agree with the article in principle, but it is demagogic to say that they are subsidizing mansions. Maybe in some parts of the country, but in Los Angeles, for example, you get this kind of dump for $700k (and access to Johnnie Cochran Elementary School).

http://www.trulia.com/property/3063189002-2211-S-Bronson-Ave-Los-Angeles-CA-90018


3 posted on 11/27/2011 6:56:02 PM PST by MrShoop
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To: MrShoop

Tiny houses like that cost huge bucks because the federal government is subsidizing huge mortgages. Federal subsidies are were a big cause of the housing bubble — and now they’re trying to keep the inflation going by keeping the subsidies going. The GOP doesn’t seem to be able to kick the spending and subsidizing habit. Really disappointing, but it shouldn’t be surprising, after the years 2000-2006, when Republicans controlled Congress and the White House — and government spending grew more than any time in history.


4 posted on 11/27/2011 7:23:01 PM PST by WilliamIII
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To: neverdem
Once again Renee Ellmers (NC-2) votes on the wrong side of an issue.

Although I live in Michigan, I contributed to her as she seemed like a true conservative, but she was co-opted by Boehner, Cantor and McCarthy faster than you can say North Carolina.

Of all the Freshman GOP House members, Renee has been one of the most disappointing.

5 posted on 11/27/2011 7:27:16 PM PST by bwc2221
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To: wardaddy; Joe Brower; Cannoneer No. 4; Criminal Number 18F; Dan from Michigan; Eaker; Jeff Head; ...
This first link was from a Forbes OpEd last summer. Anothe FReeper gave me the Forbes URL on another thread. The Forbes' webapge crashed on me twice, so I looked for an alternate source. The other FReeper said it was a good copy.

Why The Democratic Party Is Doomed

Romney: The Castor-Oil Candidate Republicans are finding the prospect of nominating Mitt hard to swallow.

Good Morning, Vietnam!

Why climategate is a catastrophe for science Copy the last title. Putting it in Google News usually works.

Some noteworthy articles about politics, foreign or military affairs, IMHO, FReepmail me if you want on or off my list.

6 posted on 11/27/2011 7:27:55 PM PST by neverdem (Xin loi minh oi)
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To: neverdem

The GOP establishment is not conservative. We already know that. Almost all of those guys think government is the answer.


7 posted on 11/27/2011 7:35:38 PM PST by GeronL (The Right to Life came before the Right to Pursue Happiness)
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To: WilliamIII

I agree that subsidies, including the home interest mortgage deduction, artificially inflate housing proces, and they should all be done away with.


8 posted on 11/27/2011 7:36:41 PM PST by MrShoop
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To: neverdem

Repulicans don’t stnd for saller, limited government, they only say they do, but once in office we find out the truth.


9 posted on 11/27/2011 7:38:17 PM PST by stockpirate (Real hero's don't wear capes, they wear dog tags.)
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To: bwc2221

NC voters have been disastrous since the death of Jesse Helms.


10 posted on 11/27/2011 7:43:59 PM PST by Theodore R. (Forget the others: It's Santorum's turn, articulate, passionate, less baggage.)
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To: stockpirate

I saw this on Zero Hedge:

http://confoundedinterest.wordpress.com/2011/11/15/fha-undercapitalized-by-50-100-billion-but-congress-raises-conforming-loan-limits-for-fha-but-not-fannie-mae-and-freddie-mac/

http://confoundedinterest.wordpress.com/2011/11/18/positive-signs-for-the-economy-but-mba-refi-apps-fall-20-97-and-purchase-apps-fall-14-97/

Republicans support expensive housing in coastal and vacation meccas. It won’t end.


11 posted on 11/27/2011 7:44:17 PM PST by whitedog57
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To: stockpirate

I know, stockpirate, but out people get irate when we tell the truth, don’t they?


12 posted on 11/27/2011 7:44:50 PM PST by Theodore R. (Forget the others: It's Santorum's turn, articulate, passionate, less baggage.)
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To: neverdem
The GOP is missing its chance to stand for limited government.

Not again?

How many decades in a row does this make?


13 posted on 11/27/2011 7:56:21 PM PST by Iron Munro (Unattended children will be towed away at the owners expense)
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To: AdmSmith; AnonymousConservative; Berosus; bigheadfred; Bockscar; ColdOne; Convert from ECUSA; ...

Thanks neverdem.
House of Representatives, by an overwhelming 292–121 margin, voted to increase funding for the Federal Housing Administration. Just as government debt hit $15 trillion, edging closer to 100 percent of GDP, these self-proclaimed scourges of spending decided Uncle Sam should continue subsidizing mini-mansion mortgage loans -- up to nearly three-quarters of a million dollars.
Still no problems with Obamacare, because that's *good* spending. /s


14 posted on 11/27/2011 8:05:31 PM PST by SunkenCiv (It's never a bad time to FReep this link -- https://secure.freerepublic.com/donate/)
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To: neverdem; ding_dong_daddy_from_dumas; stephenjohnbanker; DoughtyOne; rabscuttle385; mkjessup; ...
RE :”Almost two weeks ago, when they figured no one was watching, the Republican-dominated House of Representatives, by an overwhelming 292–121 margin, voted to increase funding for the Federal Housing Administration. Just as government debt hit $15 trillion, edging closer to 100 percent of GDP, these self-proclaimed scourges of spending decided Uncle Sam should continue subsidizing mini-mansion mortgage loans — up to nearly three-quarters of a million dollars.......
Not housing for the poor, mind you, nor even for the middle-class — luxury homes. The real-estate market is so depressed at the moment that the median sale price of a single-family home is less than $170,000. Even in high-cost areas like Los Angeles, the Wall Street Journal reports, it has plunged to less than $325,000. Yet the Republican House — installed by the Tea Party in a sea-change election to be the antidote to Obamanomics — decided the taxpayers should guarantee FHA loans up to $729,750. Had they not acted, the public obligation would have been reduced to “only” $625,500 per FHA loan — couldn’t have that, right?

????? ping

15 posted on 11/27/2011 8:09:36 PM PST by sickoflibs (Cain :"My parents didn't raise me to beg the government for other peoples money")
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To: MrShoop

Exactly true. McCarthy lives i the New York area. He knows that condos go for $1000/ft. 729,000 is a single bedroom apartment.


16 posted on 11/27/2011 8:37:44 PM PST by rmlew ("Mosques are our barracks, minarets our bayonets, domes our helmets, the believers our soldiers.")
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To: sickoflibs
Yet the Republican House — installed by the Tea Party in a sea-change election to be the antidote to Obamanomics —

well duh, on day one they didnt take a meataxe to the budget, or even mention that it was an option and at least use it as leverage...

nope, just the same ole same, the citizenry watching a two headed coin in perpetual spin...the 'power' party is the varsity, the minority is the JV, they might appear to play rough with each other during practice, but once the game starts, [post election] they always seem to be lined up together on the same sidelines, US vs them...

17 posted on 11/27/2011 8:56:07 PM PST by Gilbo_3 (Gov is not reason; not eloquent; its force.Like fire,a dangerous servant & master. George Washington)
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To: sickoflibs
RE: "Republican-dominated House of Representatives"...means little to me anymore. I do feel a bit sorry for those few that really are conservative and somewhat wise under the proper guidance. America whether it cares to admit it or not have been sold down the tubes by the far left...through the centralist, and onward into the near far right.
We have so few real leaders within the Congress and recent executive branches, hell, might as well through in the mix in the Supreme Court, that have the interests of what this Republic was founded on, how it embraced those things that really mattered in order to build it into a global super power.
It is all so un-settling to say the least.
18 posted on 11/27/2011 9:20:52 PM PST by Marine_Uncle (Honor must be earned.)
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To: neverdem

Tax collections have averaged 17.9% of GDP (Hauser’s Law) independent of tax rates. Spending more than that is guaranteed to run a deficit and increase the national debt. Spending must be reduced below 17.9% of GDP to get things under control.


19 posted on 11/27/2011 10:34:01 PM PST by Myrddin
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To: neverdem

$750k hardly gets you a mini-mansion in many parts of the country. In NYC you can get a nice one bedroom coop or condo in a good building in a good neighborhood. Buildings require 25-50% cash down payment, so there are very few evictions.
The market is highly competitive, and prices have remained steady, but have not dropped.
A nice house is $3.5 million and up, and they usually sell for the asking price.
Real Estate is very regional and local.


20 posted on 11/28/2011 12:37:43 AM PST by Cincinna ( *** NOBAMA 2012 ***)
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To: neverdem
most two weeks ago, when they figured no one was watching,

Congress is never unwatched.

21 posted on 11/28/2011 3:29:09 AM PST by Impy (Don't call me red.)
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To: Cincinna
$750k hardly gets you a mini-mansion in many parts of the country. In NYC ...

It's hardly 'many parts' of the country. A few spots on the East Coast and West Coast went nuts with rent control and development limits and drove their own prices up.

22 posted on 11/28/2011 9:05:24 AM PST by slowhandluke (It's hard to be cynical enough in this age.)
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To: slowhandluke

The Real Estate market is like any other market-based on supply and demand. Rent control, which applies only to apartments lived in continuously by the same person since 1953 or 1971 accounts for a tiny fraction of the rental apartments in NYC.
I don’t understand your statement about people going nuts. When there is a huge market for apartments and houses in neighborhoods that are charming, beautiful, convenient, and safe, when many, many people all want to live in the same place, prices go up and remain high. Most apartments in nice residential areas aren’t rentals anyway. They are coops and condos, the better buildings and nicer apartments being in coops. An average family size apartment 2200+ sq ft 3BR 3BR + formal dining room in a good pre-war building goes for $1.8-million and up. They all sell within a few weeks of listing.


23 posted on 11/28/2011 2:25:16 PM PST by Cincinna ( *** NOBAMA 2012 ***)
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To: slowhandluke

The Real Estate market is like any other market-based on supply and demand. Rent control, which applies only to apartments lived in continuously by the same person since 1953 or 1971 accounts for a tiny fraction of the rental apartments in NYC.
I don’t understand your statement about people going nuts. When there is a huge market for apartments and houses in neighborhoods that are charming, beautiful, convenient, and safe, when many, many people all want to live in the same place, prices go up and remain high. Most apartments in nice residential areas aren’t rentals anyway. They are coops and condos, the better buildings and nicer apartments being in coops. An average family size apartment 2200+ sq ft 3BR 3BR + formal dining room in a good pre-war building goes for $1.8-million and up. They all sell within a few weeks of listing.


24 posted on 11/28/2011 2:25:20 PM PST by Cincinna ( *** NOBAMA 2012 ***)
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To: slowhandluke

The Real Estate market is like any other market-based on supply and demand. Rent control, which applies only to apartments lived in continuously by the same person since 1953 or 1971 accounts for a tiny fraction of the rental apartments in NYC.
I don’t understand your statement about people going nuts. When there is a huge market for apartments and houses in neighborhoods that are charming, beautiful, convenient, and safe, when many, many people all want to live in the same place, prices go up and remain high. Most apartments in nice residential areas aren’t rentals anyway. They are coops and condos, the better buildings and nicer apartments being in coops. An average family size apartment 2200+ sq ft 3BR 3BR + formal dining room in a good pre-war building goes for $1.8-million and up. They all sell within a few weeks of listing.


25 posted on 11/28/2011 2:25:20 PM PST by Cincinna ( *** NOBAMA 2012 ***)
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To: neverdem; Abathar; Abcdefg; Abram; Abundy; albertp; Alexander Rubin; Allosaurs_r_us; amchugh; ...
Yet the Republican House -installed by the Tea Party in a sea-change election to be the antidote to Obamanomics— decided the taxpayers should guarantee FHA loans up to $729,750. Had they not acted, the public obligation would have been reduced to “only” $625,500 per FHA loan — couldn’t have that, right?



Libertarian ping! Click here to get added or here to be removed or post a message here!

26 posted on 11/28/2011 8:43:12 PM PST by bamahead (Few men desire liberty; most men wish only for a just master. -- Sallust)
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To: Cincinna

So you give an example of a location with extremely high demand.

I have lived in New Mexico, Oregon, Missouri, Michigan, Oklahoma, Kansas and Texas (Dallas and Houston). In *all* of those states you can buy what I would consider a mansion for $750k.

If people want to live and work in NYC or LA, they need to be prepared to pay the price. The rest of us move where we can find work and afford to live.


27 posted on 11/29/2011 5:45:44 AM PST by cizinec ("Brother, your best friend ain't your Momma, it's the Field Artillery.")
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To: neverdem
Where I live in CT, a house for $709,000 looks like this:



Not exactly a mansion.
28 posted on 11/30/2011 6:38:45 AM PST by jjm2111
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To: neverdem

I do agree with the article in principle, btw, just don’t like the demagoguery.


29 posted on 11/30/2011 6:49:11 AM PST by jjm2111
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