Damaging Spending
In 2007, the Advanced Technology Vehicles Manufacturing Loan Program was created in the Department of Energy to support the development of advanced (i.e., “green”) technology vehicles. Last year Congress appropriated $7.5 billion to support a maximum of $25 billion in loans. So far, the subsidies have been dished out to Ford ($5.9 billion), Nissan ($1.6 billion), Tesla Motors ($465 million), and Fisker Automotive ($528 million).
That’s the title of a
piece in Saturday’s
New York Times. That welfare usage is up in a recession isn’t surprising, but if the stigma is truly fading it’s not a positive development. As a Cato
essay on food subsidies states, “The [food stamp] program contributes to long-term dependence on government and produces various social pathologies as side effects.” Disturbingly, the USDA official who oversees the program is pleased:
The state of California recently received $60 million in U.S. Department of Labor stimulus funds to upgrade its 23 year-old unemployment benefits system. But
according to the Associated Press, California is yet to spend $66 million it received from Labor in 2002 to upgrade its system. The price tag isn’t whopping by federal standards, but it is another reminder of the need to return to
fiscal federalism.
A New York Times report on the Federal Housing Administration’s subsidies for higher-priced real estate reveals the insanity of federal housing policies. The 2008 stimulus package signed by President Bush temporarily doubled the maximum loan the FHA insured to $729,750 on single-family homes. Coverage on multi-family units can exceed $1 million.
The
Wall Street Journal is
reporting that Fannie Mae and Freddie Mac, which have already consumed $112 billion in taxpayer bailouts, may have additional losses if they can’t recoup claims from struggling private mortgage insurers.
Over the past decade, the Federal Housing Administration has been insuring riskier mortgages in an attempt to regain “market share” lost to private competitors during the housing boom. But after the housing bubble burst and private firms either went out of business or reduced their risk profile,
the FHA continued to plow ahead insuring risky mortgages. This could all backfire on taxpayers.
The U.S. Department of Energy recently awarded $2.4 billion in stimulus money to develop and manufacture electric vehicles. The ostensible purpose of the government’s effort is to set the nation on a path toward more environmentally friendly transportation. But as the USA Today notes, electric cars might not provide the environmental benefits that proponents cite:
In a 1997 study, economist Robert Higgs persuasively argued that “the New Deal prolonged the Great Depression by creating an extraordinarily high degree of regime uncertainty in the minds of investors.”
According to a new report from the Federal Reserve Bank of San Francisco, the Federal Housing Administration has “revived” the subprime segment of the housing market. Thanks to FHA lending, “the share of borrowers with FICO credit scores lower than 660 has returned to just higher than 20 percent, the same share as when subprime securitization peaked in 2006.”
The Wall Street Journal reports that the IRS is investigating 100,000 “suspicious” tax returns over possibly fraudulent claims of home buyer tax credits. Included in the economic stimulus package in February, the $8,000 tax credits were set to expire at the end of November, but the housing lobby is pressing Congress for an extension.
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