It has been said that if anything unites the Tea Party and Occupy Wall Street, it is a hatred of corporate welfare and bailouts that benefit the very wealthy.
To the extent that this is true, both movements should rally strongly against an amendment sneaked in this afternoon to a pending appropriations bill on the Senate floor. One of the most liberal Democrats has united with an ostensibly conservative Republican to restore a lapsed subsidy to benefit the 1 percent at the expense of the 99 percent, or at least the 53 percent who pay taxes and will be on the hook.
Sens. Robert Menendez (D., N.J.) and Johnny Isakson (R., Ga.), have introduced an amendment to raise the “conforming loan limit” for mortgages that Fannie and Freddie can buy, and the Federal Housing Administration can insure, to $729,750. Their measure could be voted on as early as tonight.
This loan limit expired at the end of September and reverted to $625,000. But it was only a few years ago that the limit was less than $500,000.
Menendez and Isakson have sent a document around the Senate that lists a number of specious arguments in support of their measure. They claim that “the housing market remains very weak, in part due to buyers not being able to obtain private financing.” But this is a chicken-and-egg argument, in the sense that Fannie, Freddie, and the FHA crowd out private alternatives, and Dodd-Frank applies more stringent regulations to all mortgages except those purchased or insured by these government entities.
The senators also proclaim that the loan limit’s “expiration is making a weak housing market even weaker and also makes it harder for middle class homebuyers to get mortgages when credit is already tight.”
A $729,750 home in this housing market is for the middle class? Now that’s rich!
— John Berlau is director of the Center for Investors and Entrepreneurs at the Competitive Enterprise Institute.