Last week, after Rep. Barney Frank (D-MA) said that holders of Fannie Mae and Freddie Mac’s debt shouldn’t be expected to be treated the same as holders of U.S. government debt, the U.S. Treasury took the “unusual” step of reiterating its commitment to back Fannie and Freddie’s debt.
Downsizing Blog
Reassessing FHA Risk
As the Federal Housing Administration edges closer to a taxpayer bailout due to the large number of risky mortgage loans it has insured, it continues to insist that no such bailout will be required. However, a new study from a group of economists at New York University finds that the FHA’s assurances might not be based in reality.
Six Reasons to Downsize Washington
1. Additional federal spending transfers resources from the more productive private sector to the less productive public sector of the economy. The bulk of federal spending goes toward subsidies and benefit payments, which generally do not enhance economic productivity. With lower productivity, average American incomes will fall.
Smelling Your Email
In response to this week’s news that the beleaguered U.S. Postal Service is facing $238 in losses over the coming decade, Charles Krauthammer lamented the inevitable demise of the government mail monopoly:
Ray LaHood as Santa Claus
U.S. News & World Report’s columnist, Paul Bedard, reports that Transportation secretary Ray LaHood told him that it’s fun playing Santa Claus to states and cities around the nation.
Privatize the U.S. Postal Service
In August, President Barack Obama commented that "UPS and FedEx are doing just fine. … It’s the post office that’s always having problems." We found out just how deep those problems were when Postmaster General John Potter announced that the U.S. Postal Service is facing $238 billion in losses over the next 10 years.
Federal Aid to States is Too Popular
The Economist’s Free Exchange blog asks: “[W]hy isn’t federal aid to states more popular, and popular enough to get through Congress, given that nearly every American lives in one?”
More Black Eyes for DHS
The Department of Homeland Security is in the news for a range of management problems. Bureaucratic bungling at DHS has been an agency hallmark since its creation in 2003. In 2008, the House Committee on Homeland Security counted $15 billion worth of failed DHS contracts for various projects since its inception.
EDA, NADO, & Appropriations Hearings
A couple weeks ago Orson Swindle, an assistant secretary of commerce for economic development in the Reagan Administration, was kind enough to send me news articles from his days battling policymakers over porky Economic Development Administration projects. In a 1989 Insight article, Orson gave a nice summation of one of the problems with special interest spending:
Put Housing GSEs in Budget and Privatize
The two large housing government-sponsored enterprises, Fannie Mae and Freddie Mac, have been in government receivership since September 2008. The U.S. Treasury has given the housing GSEs $112 billion in cash infusions, and this past Christmas Eve it quietly announced it would cover all of Fannie and Freddie’s losses beyond the original $400 billion limit through 2012.
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