Obama, The Fiscal Cliff And The Federal Housing Policy Crisis

12839_obamasotu Obama, The Fiscal Cliff And The Federal Housing Policy Crisis BLOG VIEW: During his post-election press conference on Nov. 14, President Obama trotted out his trademark cynicism to push for federal income tax rate increases on financially successful Americans.

‘A modest tax increase on the wealthy will not break their backs,’ said Obama, with a visible sneer on his lips. ‘They'll still be wealthy.’

This display of chiropractic sarcasm has been followed by the president's latest demand for $1.6 trillion in new taxes, $50 billion in new federal spending and the termination of congressional control over the size of the national debt only confirms that the White House is driving the country towards the so-called fiscal cliff.

Rather than work toward serious economic solutions, the president has created political distractions via shameful class warfare tactics. All through the year, the president has obnoxiously repeated his insistence that Americans with annual incomes of $250,000 are not paying ‘their fair share’ in taxes.

Never mind that the White House has yet to produce any data to prove that the more prosperous members of the citizenry are dodging their tax responsibilities – under the law, these people are paying ‘their fair share,’ thank you. And forget the fact that President Obama spent the last four years without anything that resembles a serious strategy to upgrade the federal tax code that would finally address long-simmering issues relating to tax-dodging corporations that hide their profits overseas and mega-wealthy nonprofits that avoid paying taxes while operating as de facto for-profits. In President Obama's world, individuals with XL-sized personal bank accounts are the only ones who should be shaken down because they are supposedly not taxed enough.

So, let's assume that President Obama gets his way and those earning $250,000 or higher have to pay a larger tax bill. What is their tax money going to finance?

Well, in the world of federal housing finance, there is no shortage of places for these new tax funds to go. Consider the following:

  • A federal housing finance machine that currently dominates approximately 90% of the market – and, yes, this is happening in an economy founded on the principles of capitalism, not ‘Das Kapital.’
  • A pair of government-sponsored enterprises (GSEs) that have cost taxpayers hundreds of billions of dollars in the last four years and will cost hundreds of billions of dollars more in the next four years because the administration has been unable to come up with anything that even vaguely resembles GSE reform.
  • GSE senior officers that currently earn Wall Street-level salaries – the head of Freddie Mac is taking home $600,000 a year, all paid for with tax dollars.
  • The Federal Housing Administration's Mutual Mortgage Insurance Fund, which recently dipped below zero for the first time and is now operating in a realm of negative percentage.
  • Nine different regulatory agencies to monitor the activities of the financial services world – sometimes these agencies work in unison, but more often they don't.
  • Federal loan modification programs that have performed so unsatisfactorily that even the president admitted that he missed his lofty goals.

Ask yourself: Is this your idea of a well-run government? And can anyone seriously insist that this situation has contributed to a robust housing market?

The president likes to use the expression ‘fair share,’ so may I ask: When is President Obama going to take responsibility for his ‘fair share’ of the dismal state of federal housing finance policy?

Yes, the president inherited a mess when he was elected in 2008. But we're in 2012, and at this point in time, it makes no sense for President Obama and his apologists to keep blaming George W. Bush for the inanity of the current state of housing finance policy. Well, at least we should be thankful that the White House isn't blaming this mess on a shabby YouTube video about the Prophet Muhammad.

– Phil Hall, editor, MortgageOrb

(Please address all comments regarding this opinion column to hallp@mortgageorb.com.)


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