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Wednesday, July 26, 2006 9:29 PM

The American Nightmare Initiative

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Democrats, led by Hillary stepped up to the plate today in an attempt to buy more votes than the Republicans can in the mid-term elections. This may sound like the start of a political post but it goes well beyond that. I am of course talking about budget deficits, the US dollar, "affordable housing", and long term problems with Social Security and Medicaid.

Both parties act as if there are no consequences to wasting trillions of dollars in the present while promising trillions more down the road. We do not have the money now, nor will we have it in the future. Yet no one from either party seems to care. The Bush Administration blew a half trillion dollars in a war that should not have been fought and arguably produced negative benefits for both the US and Iraq (and most likely the rest of the world too). The amount of money we are wasting on homeland security is staggering as well. Does anyone feel more secure? We are also building bridges to nowhere in Alaska. We waste tons of money on "affordable housing" projects of all kinds and at every governmental level. The list goes on and on.

Does anyone in government, other than Ron Paul, understand basic economics?

Please consider the "American Dream Initiative".

The initiative was unveiled Monday at the annual meeting of the centrist Democratic Leadership Council by Democratic Sen. Hillary Rodham Clinton of New York with support from Sen. Evan Bayh of Indiana and Iowa Gov. Tom Vilsack. All three may run for president in 2008.

"This American Dream initiative is a series of proposals to renew and strengthen the middle class and to help pave the way for the poor to work their way out of poverty," Clinton told about 375 local and state Democratic elected officials.

Democrats outline 'dream' project
  • $3,000 college tuition tax credits to help families pay for college.
  • A permanent "saver's credit" aimed at helping low-income families build equity by having the government match 50% of their savings, up to $2,000 a year.
  • $500 savings bonds for each of the 4 million children born annually in the United States and letting families with income under $75,000 augment the bonds by putting existing annual tax credits in them.
  • Pooling small businesses into a single national insurance purchase pool to augment bargaining power and streamline administrative costs.
  • Universal health care for children. The DLC says 9 million Americans under age 18 are uninsured.
  • Setting up an independent commission to crack down on business subsidies, which Clinton, Vilsack and their compatriots believe save the government $250 billion over 10 years.
  • Tax credits for employers that offer employee housing assistance programs, especially for public employees, and a $5,000 tax credit for first-time home buyers.
Corruption in Miami Dade

Government waste penetrates every governmental body, from state and federal governments all the way down to the local level, regardless of the party in power. "Affordable housing" is one of the main culprits. Please consider the Miami Herald article House of Lies.
Riverside Homes. Miami-Dade Housing Agency Funded Project.

The dirt lot that cost taxpayers $764,000 sits on a grungy corner just outside Miami, strewn with slashed tires and beer cans and an official white sign, now covered by weeds, announcing Miami-Dade's promise to the poor:

Here, behind a sagging chain-link fence, developer Oscar Rivero promised to build 24 houses for low-income families. Across town he promised 54 more, but that lot, too, is barren, occupied only by a contractor who uses the spot to hose down cement trucks.
For these two affordable housing projects, the Miami-Dade Housing Agency paid Rivero's development companies almost $1.6 million -- but not a single house was built.

It was the beginning in a series of ill-fated government deals that shook the foundation of public housing in one of the poorest and most distressed communities in the nation.

In the past five years, the Miami-Dade Housing Agency squandered millions of dollars on failed projects, pet programs and insider deals even as thousands of families languished in rotting and unsafe homes.

Aided by the agency's longtime director, a cadre of developers made out, raking in millions of dollars for homes that have never been built. From Little Havana to Liberty City, they took the money but left only empty lots, with broken baby cribs and bags of trash where houses had been promised.

Overall, the Housing Agency pledged more than $87 million to put up 72 developments for the poor, including apartments, houses and complexes for the elderly. The expected payoff: more than 8,300 new homes.

The agency diverted another $5 million -- money earmarked by state law to build homes for the poor -- to pay for a new office building complete with a $287,000 bronze sculpture of stacked teacups called Space Station that was shipped from Italy.

The Housing Agency paid more than $12 million to developers who promised dozens of houses but built only two, and years later, never returned the money.

One of the agency's most high-profile projects -- replacing dilapidated public housing in Liberty City with 411 new homes -- is so marred by mismanagement that only three houses have been built in six years. More than $22 million has been spent while 800 poor families have been forced to relocate.
That is what happens when government gets in the way.
Offering $5000 tax credits to make housing more affordable will make housing less affordable.

Back in December I wrote about Alternative Underwriting.
Illinois Governor Rod Blagojevich went off the deep end on Sunday when he announced an Opportunity I-Loan mortgage loan program for illegal aliens.

The state-backed mortgage loan program is aimed at making home ownership more accessible to first-time buyers, regardless of immigration status.

The move comes as a similar year-old program in Wisconsin is coming under fire for offering loans to undocumented immigrants. A bill that would end that program is under consideration.
In what way shape or form can government backed loan guarantees for illegal aliens help make housing more affordable, for anyone?

One of the reasons that housing is not affordable is there are 350 or so government programs to make housing affordable. It simply is not the government's place to make housing affordable. That is the market's problem. Throwing money around and giving it away is guaranteed to make housing less affordable. Yet we persist with policies that are guaranteed to fail right from the start.

An applicable quote came up just yesterday in Think Outside the Box Score.

"When I started writing I thought if I proved X was a stupid thing to do that people would stop doing X. I was wrong." Source: Moneyball, Michael Lewis

This is not a Dream Initiative, it is yet another nightmare based on policies that have proven to fail every time. That is the sad economic reality regardless of what party you intend to vote for. If we persist with such nonsense, it ultimately will be bad news for the US dollar and for the US itself.

Mike Shedlock / Mish

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