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Politics : Just the Facts, Ma'am: A Compendium of Liberal Fiction -- Ignore unavailable to you. Want to Upgrade?

To: Sully- who wrote (70048)	3/3/2009 4:26:05 AM
From: Sully-	Respond to of 90947

Rewriting Mortgages and the American Social Contract By Tom Suhadolnik American Thinker All government programs have unintended consequences. But rarely has a program been so potentially damaging to the American social contract than President Obama's Housing Relief Program. To most homeowners paying the mortgage is not merely a legal requirement; it is a moral imperative. The residential mortgage is also the financial and legal underpinning of the American Dream of homeownership. The President's proposal risks stripping mortgage obligations of their bedrock status in our society. Government programs to redistribute wealth are unpopular with a majority of Americans. The mythical rich who did not pay income tax (in 2006 the top 10% of households with adjusted gross income of $108,904 paid 70.79% of federal income taxes) and welfare recipients like California's In Vitro Octomom are the sort of issues which dominate what substitutes for reasoned debate on wealth redistribution. We discuss these caricatures because people putting money into the system and people taking it out tend not to know each other. Our federal tax system transfers wealth from one socio-economic stratum to another. In the US, a home is the largest asset owned by the majority of homeowners. Retirement plans like 401ks and IRAs are a distant second except for older workers with high salaries. President Obama and his surrogates have been careful to say his proposal would not help speculators or house flippers. Presumably his goal is only to help deserving people stay in homes they occupy because they are more sympathetic. He may be surprised to learn that the public does not always agree. In 2007, Cuyahoga County in Northern Ohio became the symbol of the foreclosure crisis in the industrial Midwest. In early 2008, The Cleveland Plain Dealer published a series of articles trying to put a face on the story. The first attempt was a story about a man losing his home to foreclosure because he could not pay his $1,300 per month mortgage. In the body of the article we learned he was a $75,000 per year auto worker with a $40 dollar per day ($1,200 per month) lottery habit. The next day the paper published a story about a thirty-nine year old grandmother of five who was losing her $105,000 home. She had purchased the home without a mortgage using proceeds from a $500,000 settlement she received after her 10-year-old son drowned at a church camp. Seven years later she had managed to spend the remaining $395,000, mortgaged the house, and then defaulted. When these faces were attached to the foreclosure crisis reaction to the story was nearly unanimous and unsympathetic. Cleveland is not some conservative hot bed; the Plain Dealer covers the congressional district which has elected liberal populist Dennis Kucinich to congress six times. Yet, the overwhelming majority of comments on talk radio, the internet, and editorial pages called for these people to lose their home. It was the sort of unanimity of opinion rarely seen on political or social issues. Obama's program will take the temporal subjects of a newspaper article and move them into a house down the block. They won't merely be a face; they will stand as a real person with all the real or imagined flaws their neighbors project on them. The 90%+ of American mortgage obligors who are current will see money taken from their paycheck and applied to their neighbor's mortgage. They will be reminded of their contribution every time they drive down the street. Wealth transfers will become an intra-neighborhood process. If you live in Washington and work 18 hour days in the Capitol or White House you might not realize many of us in the suburbs tend to gossip about our neighbors. We tend to think we know who is living beyond their means or who has run into a rough patch. Further, Washington wonks might not know going online, looking at county property records, and reading about a recent neighborhood home sale or refinancing transactions is how us suburbanites watch value of our largest asset. Neighborhood busybodies will quickly spot people who are refinancing under the generous terms of Obama's program. They might notice too if the lucky homeowner is driving a new luxury car, or which program participant vacationed in the Caribbean last year. The backyard gossip will act as a de facto intelligence gathering operation. Before the end of summer everyone in the neighborhood will know who is being bailed out and judgment will be rendered. Decades of class warfare politics have morphed envy from a cardinal sin to a civic virtue. Like the subjects of The Plain Dealer stories, there will be hard feelings directed at those lucky enough to refinance under the program. An argument can be made the program would be good for the American body politic. Boiling down the abstract concept to wealth redistribution to a tangible transfer between neighbors will make people think about its implications. The potential downside of the program, however, is much greater. "Why should I pay my mortgage?" is a rhetorical question starting to be asked on television and around the water cooler. As Obama's program begins to selectively help people in neighborhoods across the country the rhetorical will become real. And when people sit down to write the check for next month's mortgage payment they may not be able to answer the question. The moral imperative which makes the residential mortgage the first bill to be paid every month will be questioned. Millions of mortgages, as well as the American social contract, may be re-written. Tom Suhadolnik is a serial entrepreneur and management consultant living in Kent, Ohio. Tom can be reached at tom - at - suhadolnik.com americanthinker.com