Wednesday, February 18, 2009

What is $75 billion compared to $800?

The ink is barely dry on the “stimulus” package and President Obama is already coming back for more. This time it is “only” $75 billion to bail out the housing industry, although you can rest assured that number is only going to go up.

A total cost of the effort wasn't immediately clear, though it could eclipse more than $275 billion because of new commitments to the Fannie Mae and Freddie Mac.

The Obama administration's plan has three main elements: an effort to help homeowners refinance; another effort to help stabilize the housing market through a $75 billion initiative aimed at reaching up to four million at-risk homeowners; and a third element that aims to drive down mortgage rates.

Make no mistake, this is just the beginning of a litany of spending initiatives that are going to come up. Each one will be accompanied by dire warnings of impending doom if we don’t acquiesce to the insatiable appetite of the new administration for more and more spending. Just as assuredly each one will be followed, just like the “stimulus” package, with warnings to not expect instant results and prep us for the next big spending demand.

If the economy doesn’t pick up in 2009, which in my amateur opinion it will not, it is an ominous sign that the new President is a one trick pony when it comes to economic policy, and that trick is spend, spend, spend. Provided the spending doesn’t permanently cripple the economy in the short term, the U.S. economy will bounce back eventually, perhaps in 2010 and Obama will be lauded with credit by his fawning acolytes in the media but the long-term ramifications of t his runaway spending spree will weigh down the American economy for decades to come.

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