Bailout Bonanza
Privatizing profits while socializing losses is becoming routine.


Deroy Murdock

Congress could level this playing field by making rent checks as tax deductible as mortgage payments. Despite being totally overlooked amid the political pampering and promises that homeowners enjoy, renters are no less patriotic and decent citizens than mortgage holders. And if there is something unsavory about occupying apartments rather than actual houses, that’s fine. Just kindly pry Uncle Sam’s sticky fingers off of our unsavory wallets every April 15.

Is there a sunnier path out of this swamp?

Banks that hold mortgages should let borrowers with financial troubles pay a portion of what they owe every 30 days, on a month-to-month basis. Meanwhile, prospective new owners could inspect these homes. If owners’ money woes vanish, they could bring their accounts up to date, and then stay put. If not, they would have one month to clear out once new buyers have cleared escrow. This makes much more sense than for residents to suffer foreclosures, vacate, and then leave banks holding inventories of deserted houses that yield zero income, flood the market, and depress real-estate prices from sea to shining sea.

The worst news is that this $300 billion boondoggle is just the latest example of America’s burgeoning bailout culture. It is becoming routine in the land of the free and the home of the brave to privatize profits and socialize losses. These include the $125 billion savings-and-loan bailout of the late 1980s, the Federal Reserve’s $3.6 billion bailout of Long-Term Capital Management in 1998, this year’s $30 billion bailout of Bear Stearns, plus $106 billion in Keynesian stimulus checks for nearly everyone, and the never-ending budget-busting bailouts of U.S. farmers via Stalinesque, five-year plans. Americans who are wealthy enough to afford beach houses periodically watch them wash away in hurricanes, only to see them repeatedly replaced at taxpayer expense.

The United States is devolving into a social plutocracy. A relatively small number of often affluent Americans cushion themselves from the consequences of their failed risks by sponging off of this nation’s 130 million prudent but exhausted taxpayers.

– NRO contributing editor Deroy Murdock is a columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution.

© 2008 Scripps Howard News Service


Sign up for free NRO e-mails today:

NRO Polls on LockerDome

Subscribe to National Review