Is it just me or does this seem like a really bad nightmare? The last 18 months I have felt like I was in the movie “Inception,” and to be honest sometimes I wish I was- at least I would wake up from that. I read about a Manhattan condo building today that has an outdoor movie theater and panoramic views of Central Park and the Statue of Liberty, but now is also known for being approved to receive a Federal Housing Authority (FHA) loan. The prices of the condos range from $820,000 to $3 million, the most expensive housing units the FHA has insured in its history.
The FHA was created in 1934 to allow for more low- and middle-class Americans to buy homes. The real travesty is that now FHA loans are being provided for luxury condos in Manhattan. Somewhere we have forgotten who it is that needs the help and who is receiving it. With over half of all mortgages guaranteed by either Freddie or Fannie and the government trying to get more people into houses or keep them in their houses, we are facing a crisis like never before.
I am not upset with FHA helping people buy homes, but I am bothered with how easily they have changed their rules and purpose since their formation. It took an act of Congress to increase the size of loans to over $700,000 and now the FHA can arbitrarily raise the limit to $3,000,000 because market conditions?
So, to review, on one end we are bailing out the rich with the opportunity to receive FHA loans and on the other we are robbing the food stamp program, which helps give food to the poorest Americans. When does this nightmare end? The Obama Administration began 2009 by making it clear that he was going to tax the rich and make sure they paid their “fair share” in taxes. But just last week Obama pushed to rob the poorest and payout billions to teacher unions, police and firefighters nationwide.
This one-time influx of billions of dollars to state budgets will keep teachers and emergency responders on payrolls for at least one more year, whereas the states will be on the hook for their guaranteed pensions for years to come. The cycle is endless. The state of California will end up paying twice in retirement benefits than we receive to keep the government workers on the payroll for one more year. The problem is not that we do not have good intentions. I’m all for having good intentions as long as it is backed up by a sound economic platform. The problem is that government should not try to create jobs by redistributing tax dollars they never should have taken in the first place.
In the midst of Ronald Reagan’s economic revival he said, “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it”. Today we are doing exactly that. Government does not create jobs, companies do. If we look at the states that just received federal assistance to save teacher jobs we will also see high taxes and an anti-business environment.
We need to cut taxes and deregulate businesses now more than ever. One of my clients had to lay off his employees just to break even. “I have enough work to employ three or four guys right now,” said Bob, a local concrete cutter in Orange County, “but I can’t afford to pay the payroll taxes”. Business owners like Bob are sick of the anti-small business mindset in the state and federal government.
As I look forward to the second of November, I am buoyed by hope that when I wake up after Election Day I will realize that the last two years had just been a horrible dream, and that our country will be one step closer to true recovery.
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