July 30, 2008 **
Virtually no one believes that the mortgage bailout bill passed by the Democrat-controlled Congress will serve the public interest. Many thousands of people will probably end up getting foreclosed anyway, while new prospective house buyers will face a credit market that will be tighter because lenders will become more distrustful. (It's the age-old problem of "moral hazard" -- when public policy undermines the discipline of the market and creates incentives to bend the rules.) Nevertheless, the Senate approved it by a vote of 72 to 13, after the House passed it by a 272 to 152 margin. (Hooray for the gutsy House Republicans!) Amazingly, the Washington Post actually got it right on an economic issue, for once, noting that the bill is "unlikely to relieve the foreclosure crisis..."
The mortgage bill is a prime example of what political scientist R. Douglas Arnold called a "politically compelling policy: The popularity of the intended effects outweighs the legislator's doubts that the means will actually work, because his opposition would be construed as lack of sympathy."
President Bush heavily criticized the bill, but as a lame duck whose party can't afford to alienate voters this fall, he probably doesn't have much choice but to sign it. Having staked his presidency on the idea of "compassionate conservatism," it's hard for Bush to appeal to reason in debates over public policy.
So what will be the end result? Millions of prudent, thrifty tax-payers will end up shelling out money to people who probably never should have bought a house in the first place. ("What a terrible thing to say!") Well, this is one of those cases where the American Dream of homeownership runs smack into cold, hard reality. By rewarding those who gambled and lost, while punishing those who played it safe, Congress will subvert the function of the market. That will lead us one step closer to a state-controlled (but "compassionate"!) economic system. In short, the mortgage bailout bill is totally bogus.
Speaking of bogus, the Democrats in the House are up to their usual no-good grandstanding. They say hope springs eternal in the human breast, and perhaps the same holds true for craving revenge. C-SPAN has been showing the House Judiciary Committee hearings in which expert legal witnesses are testifying as to the impeachability of President Bush, or rather, whether impeaching him would be an appropriate legal remedy. One of the leading voices in this absurd diversion is Rep. Debbie Wasserman Schultz, a rising young star in the party. (Oddly, her accent sounds more like the back alleys of The Bronx than the 20th District of Florida which she represents -- Fort Lauderdale, etc.) I noticed from her Web site that her district is heavily gerrymandered, and I'd like to know which party is responsible for that.