The administration underestimated the magnitude of the economic imbalances that spawned the recession, and overestimated the government’s ability to quickly right the ship. Despite the Obama administration’s massive economic interventions, unemployment remains high and the economy is still sluggish. The administration has been defending itself by claiming that its actions prevented a worse recession or even a depression.
The Treasury Department and Department of Housing and Urban Development held a high-profile conference this week on the “Future of Mortgage Finance.” The federal government is currently backing more than 90 percent of new mortgages through Fannie Mae, Freddie Mac, and the Federal Housing Administration.
A new Department of Housing and Urban Development’s inspector general report finds that the agency initially required, and then “encouraged,” recipients of HUD stimulus funds to post signs indentifying projects as being funded by the Recovery Act. In other words, HUD pushed recipients to engage in political advertising, and to do it with taxpayer funds.
The city of Bell, CA recently made national headlines when it came to light that city officials have been receiving massive six-figure salaries. Bell taxpayers were so irate that police in riot gear were required to maintain control at a recent city council meeting.
The Department of Housing and Urban Development is pushing legislation that would enable public housing projects to access private financing. Due to limits on how much of a tenant’s income can be used for rent, public housing authorities have been reliant on billions of dollars in annual federal operating and capital subsidies.
When the 2008 economic stimulus bill created an $8,000 homebuyer tax credit to prop up the ailing housing market, the outcome was predictable: fraud and economic distortions.
The House recently passed legislation to reform the Federal Housing Administration, which is facing a potential taxpayer bailout thanks to all the bad mortgages that it has backed. When the housing bubble burst, the FHA rushed in to prop up the market and now insures approximately 30 percent of new mortgages. In 2006, the figure was just 3 percent.
In a recent speech to real estate interests, former Clinton HUD secretary Henry Cisneros preposterously claimed that the recent housing meltdown “occurred not out of a governmental push, but out of a hijacking of the homeownership process by some unscrupulous interests.”
House Republicans unveiled a bold strategy to cut 0.017 percent from the $3.7 trillion federal budget this week. Republican Whip Eric Cantor unveiled the GOP’s “YouCut” website, which includes five possible spending cuts for citizens to vote on. Mr. Cantor promised to take the favored cut to the House floor next week for members to consider.