By Bill Wilson
Does Barack Obama actually want America to get back to work? That is the question that I asked myself as I read about his latest brainstorm: forcing mortgage lenders to not collect payments from those who are unemployed.
As reported by the Washington Post, “Banks and other lenders would have to reduce the payments to no more than 31 percent of a borrower’s income, which would typically be their unemployment insurance, for up to six months. In some cases, administration officials said, a lender could allow a borrower to make no payments at all.”
While a typical Obama sound bite idea, in principle this is just another in a long series of economic disasters that has flowed daily from this Administration. It seems intent on plummeting the nation into Third World status.
Ronald Reagan’s old adage applies: “If you want more of something, subsidize it; if you want less of something, tax it.” In this case, Obama’s basic plan is to use what remains of the $700 billion Troubled Asset Relief Program to subsidize unemployment and sloth.
As a result, that is what they are going to get — a lot more of it. While everyone is sympathetic to the hardship faced in this tough economy, every American who pays their bills and plays by the rules is being screwed to the wall by Obama’s new mortgage bailout.
But, it’s even worse than that. The irony of Obama and his cohorts attempting to force the ever-shaky mortgage banking industry to cover the loans of the unemployed is that it creates the very real possibility of a double dip financial crisis. What bank is going to lend money in an environment where the government essentially demands that they not collect the debt? Of course, in the end, someone pays, and as usual it is the poor slob who pays his mortgage every month, or wants to buy a new house.
Harry and Mary Wannahome will now likely have to pay an interest premium to cover the possibility that he/she may become unemployed and not make payments for months/years at a time, further increasing the cost of purchasing a home and making even the most modest home even less affordable.
Banks are likely to require significantly higher interest rates on homes that are purchased with lower down payments denying young, prospective homeowners the opportunity to buy a home until much later in life, if at all.
Naturally with demand for homes spiraling downward, construction jobs will continue to be scarce, but that isn’t the most egregious impact on employment.
Through this subsidy initiative Obama is actually incentivizing people to become unemployed. If one is behind on his or her mortgage, it may make more sense to quit your job rather than get a second one to pay his or her bills.
If an employer offers you a job at $20 an hour, can you really afford to take that job when it will kick your mortgage payment back into gear? Wouldn’t you be better off working for $10 an hour under the table, rather than double that with your mortgage payment due?
Effectively, the Obama free mortgage giveaway coupled with the seemingly infinite numbers of extensions of unemployment insurance benefits are nothing more than an incentive for people to choose to continue to be unemployed and dependent on the benefits provided by the government.
I always used to assume that Obama and his ilk just didn’t understand basic pocketbook economics, but the more I think about it, maybe Obama really doesn’t want Americans to go back to work.
After all, a working person doesn’t rely on the government for his or her well being. But someone who is unemployed is dependent on — some would say enslaved to — the government services they receive and the masters who provide them.
Something to think about.
Bill Wilson is the President of Americans for Limited Government.
