Acts Won’t Save Homes

You can always count on the political class in this country to solve any problem they perceive with a check. Now, of course, that is easier for them to do because it is not their money. In the case of the federal government, it’s not even our money. In fact, with the size of the growing national debt, it’s our children’s money. As I wrote in last week’s column, we are still paying back state bonds authorized in 1970.

The latest political boondoggles on Capitol Hill are the “Economic Stimulus Act of 2008” passed in January and Senate Bill 2636 “The Foreclosure Prevention Act of 2008” passed out of committee by the Senate Thursday. The economic stimulus package will cost our children $168 billion. The Foreclosure Prevention Act will cost another $15 billion.

Neither act will stimulate the economy nor prevent any foreclosures. But they are not really meant to do that. Their only purpose is to get incumbent legislators reelected.

All Congress seems to cares about, Democrats and Republicans alike, is demonstrating to the public how much they care. If the economy is in bad shape or foreclosures are growing, just do something about it. It is oh-so painful to watch an economically illiterate Congressman yap on some cable network that this legislation is needed to avoid a recession or to stop foreclosures.

The voting public needs to understand that very few Congressmen or women actually understand anything about economics or how the real economy works. The only requirement to be in Congress is to receive the most votes. How do you get the most votes? By letting the voters know how much you care. It’s a vicious cycle.

Now, I guess you could argue that if the money is spent on items that will help the economy, it could pay for itself. Don’t hold your breath. For the most part, the stimulus act, among other things, is just sending out checks to 119 million households in the hope that it might strengthen the economy. Though some of the tax incentives for business may be good, sending families checks for more than $100 billion is a very inefficient way to stimulate the economy. The whole stimulus package, according to Office of Management and Budget Director Jim Nussle, is supposed to create 500,000 new jobs. Let’s see, $168 billion divided by 500,000 jobs. That comes out to only $336,000 per job. I wonder where we can apply.

Imagine my surprise, when I learned from my accountant that my family would be getting one of these checks for more than $2,000. Needless to say, the Righeimer family is not missing any meals. My accountant explained that with the magic of loss carry-forwards and accelerated depreciation on some of the shopping centers I built, we qualify. I had no idea how much we needed the help.

The Economic Stimulus Bill passed in the house with 385 ayes to 35 nays with 10 abstaining. Only one out of 12 representatives knew that this bill was a fraud and would not do anything to help the economy. Lucky for us, we have two of those nay votes, Reps. Dana Rohrabacher and John Campbell.

I haven’t talked to either of them about the bill, but I know their personalities. Campbell, a former certified public accountant, probably modeled the economic impact to the economy in net present value and concluded it was a net loss.

Rohrabacher, former Orange County Register editorial writer and speechwriter for President Reagan, just figured that you could never stimulate the economy by handing out the treasury. Rohrabacher’s Libertarian mind never fails him in fiscal situations. Either way, they both got it right. It’s a lonely place in Washington when even your own party is voting against you. These gentlemen need to hear from us that they did the right thing.

The fact is, there is very little Congress can do in the short run that will be effective in stimulating the economy or preventing foreclosures. Last I checked it was the private sector that created jobs, and I understand they can do it for less than $336,000. And as far as foreclosures are concerned, I will leave it to the lenders and borrowers to figure out how to solve that problem. Congress could never pass a law that both the lenders and borrowers would not abuse at the expense of the taxpayer.