07.01.2008 0

U.S. Senate Presses Your Luck

  • On: 07/20/2008 12:47:28
  • In: Economy
  • In the famous 1980’s game show, Press Your Luck, contestants were thrilled to gamble with money they themselves didn’t have; and invariably, the Whammy would take it all away. It appears Big Government is the latest contestant.

    Demonstrating once again how interventionism breeds yet more interventionism, the U.S. Senate is rapidly moving to expand Big Government’s Big Giveaway to “cure” the foreclosure virus.

    As reported by the LA Times
    , a bipartisan Senate compromise will cost at least $21.6 billion, which includes $6 billion in tax write-offs for the home-building industry and other businesses affected by the credit crisis, $10 billion in tax-exempt bonds for low- and middle-income first-time homebuyers and to refinance existing sub-prime mortgages, $4 billion in block grants to buy vacant or abandoned homes, and $1.6 billion in tax credits for purchases of foreclosed homes.

    The real pandemic is central planning by government. Why don’t they just give away interest-free credit cards that need not be paid back while they’re at it?

    Among the grounds being used to justify this expansive role of the Federal government as the guarantor of housing for all: the Fed is bailing out the financial industry, so now it’s the homeowner’s turn at taxpayer expense:

    “The compromise measure, placed on a fast track by the election-year desire to mollify voters, could be approved by the Senate as early as this week. It would be the first significant intervention by federal lawmakers to aid victims of the mortgage crisis…

    “Senate leaders acted after critics drew a stark contrast between the Federal Reserve System’s prompt action last month to rescue the investment bank Bear Stearns Cos. and the disjointed efforts by Congress and the White House to relieve the effects of the crisis on individuals.

    “’We helped Wall Street. We’re all glad that Bear Stearns was taken care of,’ Senate Majority Leader Harry Reid (D-Nev.) said Wednesday after the agreement was announced. ‘But now it’s our opportunity to take care of people on Main Street.’”

    Way to go, Ben! Because the Federal Reserve moved ahead with its own Big Bailout, now everyone’s looking for a handout. Another triumph for the “free” market!

    In truth, the more Big Government intervenes in the markets to react to major downturns in the economy, the more it feeds the perception that it is government which promotes prosperity, and not individuals acting in the free market.

    Central planning is pretty contagious! Perhaps Congress and the Fed should be quarantined before they press our luck even further.

    ALG Perspective: The Big Bailout continues, apparently with no end in sight, and politicians – looking to exploit this crisis as an election year giveaway – may not see the error of central planning until the Stagflation Whammy hits. The Federal government is just a step away now from guaranteeing housing for all, since it is already artificially bringing down interest rates and simultaneously telling those being foreclosed upon not to worry about paying their debts now. Big Government is only treating the symptoms of the disease – interventionism – which it incubated long ago. And what is their cure for the problem? Yet more interventionism! As the Guinness Brewmasters would say, “Brilliant!”

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