Test Pattern #57: Who's In Your Wallet?

Over the weekend, the Senate held an unusual Saturday session in order to pass the "Foreclosure Prevention Act of 2008" or was it the "Housing and Economic Recovery Act of 2008"? No wait. Wait, wait, wait. It was the "American Housing Rescue and Foreclosure Prevention Act of 2008". That's it.

No matter what name they put at the top of this bill, and they had many to chose from, it's nothing more than a 600 page document of how much Congress (and the President) have lost touch with the American people. It's a 600 page guide on how to make the American people think you actually care about them during an election year.

The bill was sponsored by Speaker of the House Nancy Pelosi. It was co-sponsored by 18 of her fellow Democrats. Not a single Republican signed on to co-sponsor this measure, and it passed the House on July 23rd by a vote of 272-152. All but three votes against the measure came from Republicans, although 45 Republicans joined the Democrats in passing the measure.

The Senate passed the measure by a vote of 72-13. All thirteen no votes came from Republicans, and 27 Republicans helped push the measure through the Senate.

This was hardly an example of bi-partisan cooperation. It was nothing more than the work of a Democratically controlled Congress and a bunch of "up for re-election" Republican cowards. Neither John McCain nor Barack Obama were present for the vote, proving even more that this was anything but a remarkable bipartisan effort on behalf of the American people.

So, what exactly is in this bill?

Nancy Pelosi and her fellow Democrats could hardly wait to get it passed, and the President is so proud of the fact that he's signing it that there is NOT even going to be a bill signing ceremony, nor any press coverage when he does, in fact, you know, sign it. What could be included in this bill that would make him less than proud to be signing it?

HR 3221 allocates $180 million in "pre-foreclosure counseling". Remember now, this in no way helps people whose homes are already in, or have gone through, foreclosure. At least those who were able to hold out this long will get counseling on our behalf at a cost of 60 cents for every man, woman, and child in America.

HR 3221 makes it possible for Freddie Mac and Fannie Mae to secure loans as high as $625,000, and it also allows them to buy and back mortgages at a rate 15% higher than median home prices. There is no stipulation in this bill for the total number of loans they can back, or how much this will really cost the American taxpayer so your guess is as good as mine.

Sandy Dunn, the president of the National Association of Home Builders (NAHB), issued a statement today that said,

"This landmark bill contains several provisions to help home buyers, stop the slide in home prices, provide a lifeline to borrowers facing foreclosure, improve mortgage liquidity and bolster confidence in Fannie Mae and Freddie Mac. We commend Congress for working in a bipartisan fashion to provide much-needed relief to the American people."

It's amazing what a lobbyist will say to make themselves sound more compassionate and understanding of the woes of the American people. If she, and anyone else involved in the passage of this bill, was really concerned about providing much-needed relief to the American people, they wouldn't be backing a bill that does nothing more than add $25 billion to our national debt over the course of the next ten years and who knows how much over the course of many years to come. Once HR 3221 is signed into law, the Treasury Department will gain unlimited power to lend money to Fannie Mae and Freddie Mac or buy their stock, until the end of 2009. Do you have any idea how much that could cost the American people? I don't.

HR 3221 includes $3.9 billion to "fix up, redevelop, or otherwise repair" neighborhoods destroyed by foreclosures and abandonment. 3.9 billion dollars. For the record, that's approximately $12.95 for every man, woman, and child in America.

Of course, the focus on this bill, in the media anyway, has been on two other measures included in the bill.

The first, is the $15 billion tax cuts and "credits" to first time home buyers. What a joke this section is. You see, first time home buyers will receive up to a $7,500 in tax credits if they purchased their homes after April 9th of this year. But it's not really a credit. In fact, it's nothing more than a no interest government loan provided at our expense. While it's true that first time home buyers will receive up to $7,500 on their tax returns, they will also be paying it back for 15 years, in 15 equal installments. That's up to $500 additional tax burden every year, for 15 years. Some credit huh? I bet you didn't hear about the "repayment" part on the six o'clock news. Why does this tax "credit" only help those who purchased their home THIS year? I thought this problem started because of mortgages initiated over the course of the past few years? Hmm. I guess those people are screwed huh? Oh and by the way, this provision comes at a cost of $50 for every man, woman, and child legally in America.

The other measure the media is focused on is how this bill will allow the FHA to insure up to $300 billion in new mortgages for up to 400,000 homeowners across the country. That's an average loan of $750,000 per homeowner at a cost of $1,000 for every man, woman, and child in America. $750,000? Who is this bill designed to help anyway? I know people are hurting all over the country, and I know the average mortgage is well under $750,000. If they are going to spend $300 billion, why are they only helping 400,000 people anyway? When millions of people are facing possible foreclosure, 400,000 people doesn't sound like a lot. Of course, this measure will only help those who would otherwise still qualify for a new loan anyway. Why do they need assistance then? What about those who have no choice but walk away because no one is going to help them? Yeah, I get it.

HR 3221 will also provide for a $1,000 tax credit for homeowners who do not itemize deductions. Do these people really need rescuing? Seriously. They aren't missing payments, they aren't being forced to walk away from their dream of home ownership. They are simply people who don't itemize deductions. Why do they get special treatment?

After covering what we have so far, the potential cost to every American citizen sits at $1,063.55, yet the Congressional Budget Office estimates the cost of this legislation will amount to $25 billion in just ten years. This does not include any of the special Treasury Dept backing of Freddie Mac or Fannie Mae. So their estimate puts the "for sure" cost at $83.33 for every man, woman and child in America.

HR 3221 also abolishes "seller funded down payment assistance". For those of you who don't know, there are non-profit organizations out there, like the Nehemiah Foundation, that obtain a donation from the seller, and then "gift" the money to the buyer to use as a down-payment. We were fortunate to have received a Nehemiah gift when we bought our house. It made purchasing our home a little easier for us, and we appreciated it at the time. Nehemiah donations have no bearing on whether or not you can afford a new home, they just helped the seller with a little incentive to attract more buyers. But October 1st, the federal government through their new $7,500 "no interest 15 year loan", will be the sole provider of such gifts, at our expense.

I haven't finished reading the entire bill, it is over 600 pages you know, but I do know that this bill authorizes raising the federal deficit by $800 billion to $10.6 trillion. Do you have any idea how much 10 trillion is? Let's put it in perspective for you.

If you go back in time just 1 trillion seconds, you would find yourself standing in the year 29,701BC. If you had a spaceship that contained enough fuel to travel 1 trillion miles, you could travel to the sun and back 10,752 times. With the current population of the United States standing at just over 300 million people, if our national debt was $1 trillion, each man, woman, and child in America would owe more than $3,320. But then again, our national debt is not $1 trillion, soon it will be $10 trillion and Congress just made it worse.

And now for the complete surprise (for most of you anyway).

There is a little gem hidden in HR 3221 under "Title III – Revenue Provisions", "Subtitle B, Revenue Offsets", Section 3091, which requires all electronic payment transactions to be reported to the government. When HR 3221 is signed, the government will be authorized to collect detailed information about every transaction you make that does not involve cold hard cash. This includes all of your VISA, MasterCard, American Express, and Discover card transactions. In includes all of your PayPal transactions. Every electronic transaction must be recorded and reported to the federal government. Your spending habits just became the property of the U.S. Government.

That's right people. While Congress was busy talking publicly to the media about their valiant effort to save the poor endangered homeowner, they were also secretly chipping away at more of our civil liberties in the process.

Here are some question you should keep in mind:

Should the Federal Reserve (a private organization) really be overseeing Freddie Mac and Fannie Mae?

How are we going to finance all of the costs of this bill, let alone the rest of Congress' out of control spending?

Which foreign government will be the first to call that debt?

How many civil liberties are we willing to give up?

Does the federal government really need to know that you just called your aunt Gladys to wish her a happy birthday?

Do they also need to know that you bought her a 1970's era Tupperware set on eBay and had it delivered via FedEx?

When will we stand up and say enough is enough?

Our Congress has let us down once again, and so has our President. I don't know about you, but I've had enough.