As I write today, the U.S. Senate is about to vote on the historic bailout of the mortgage industry. The House voted down a similar proposal on Monday, responding to the outcry from its constituents.
As the media have reported on the formulation of the Senate bill, they suggest that tax payers would approve of the measure if there were some special provisions in the new law for them. In other words, we won’t go for a basketful of candy for someone else; but if you put some candy in there for us, then we are all for it.
Now, I don’t like that thinking, and I resent the implication that we would be so shallow. The reason I oppose the bailout is that it is wrong fiscal policy, and it violates the principles of the free market.
It is wrong fiscal policy to put the tax payers further in debt. We are looking at increasing the national debt by nearly a trillion dollars. Even now, the federal budget must provide for billions of dollars annually simply to service the debt. We are paying interest, but not paying any principal. This measure would increase the debt by about 10 percent and increase our interest payments. No one would advise any person to handle his personal finances this way.
The measure also violates the principles of the free market. The government should get out of the way of the marketplace as much as possible. Some regulations are needed, but they should be minimal. This measure doesn’t just call for more regulations. It calls for the government to buy assets from the private sector and get into the mortgage business. With Fannie Mae and Freddie Mac, the government has already proven that it doesn’t do well in the business.
And now, the Senate has passed the bill. It is 451 pages long, and only 120 pages of the bill have to do with the bailout. All the rest is candy, made to sweeten the deal. I hope it doesn’t make us sick.