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The Problem With House Republican Economic Proposal: Shelf Life v. Perpetual Government Program

At The Corner on National Review Online, Stephen Spruiell makes one heck of a point that deserves much discussion among House Republicans and their alternative plan.

* Rather than providing taxpayer funded purchases of frozen mortgage assets, we should adopt a mortgage insurance approach to solve the problem.

* Currently the federal government insures approximately half of all mortgage backed securities. (MBS) We can insure the rest of current outstanding MBS; however, rather than taxpayers funding insurance, the holders of these assets should pay for it. Treasury Department can design a system to charge premiums to the holders of MBS to fully finance this insurance.

Immediately, this strikes me as the kind of program that has the potential to become a permanent feature of the policy landscape as opposed to a temporary measure. These kinds of government insurance plans can be very hard to kill. Whatever its drawbacks, the Paulson plan -- buy, hold, liquidate -- would be easier to terminate.

The shelf-life of any government involvement is key to my view of any such assistance plan or program. In fact, I will be willing to "pay more" or endure more short term pain (presuming it is one that actually addresses the crisis constructively) if I know it (the program and government direction in our free market) has a shelf life and will be terminated - in other words, a course and an end point.


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Comments (5)

I'm not for any program tha... (Below threshold)
GarandFan:

I'm not for any program that includes funding for ACORN. Dodd and Frank can piss off with that part of the bail out. Their %#$%@ party started this mess and they've got the balls to insist that part of the bail out includes future funding?

Is there anything more perm... (Below threshold)

Is there anything more permanent than a 'temporary' government program?

the proposal is for a "priv... (Below threshold)
Jeff:

the proposal is for a "privately" aka non-taxpayer funded insurance program.

So this is not the same as taxpayer funded programs. Not perfect but not as bad as you are painting ...

Paulson plan, precedence fo... (Below threshold)
A Stoner:

Paulson plan, precedence for the Federal Government to spend 6% of GDP every time there seems to be a problem. Cost to tax payers, not measurable, because the $700,000,000,000.00 is just the tip of the iceberg on this.
Republican plan, persistant company financed, government handled mortgage insurance. Cost to tax payers is what ever oversite costs, likely less than a few tens of millions a year, and likely can be rolled into the actual cost of the insurance premiums, thus, no cost!!!!

Have we ever seen a governm... (Below threshold)
Rob:

Have we ever seen a government program get "terminated"?
It is much easier to pass legislation than to get it recinded, as congress seems to write it in stone.
I don't know what the answer is, but either way I see it costing us all a lot to fix what a few have profited from.




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