February 4, 2009

Democrats "Staunchly Opposed" to a Stimulus for Regular Folks

Carroll Andrew Morse

According to the New York Times, "senior Democratic lawmakers" are opposed to the Republican proposal to create a long-term stimulus by lowering mortgage rates...

[Senator Mitch McConnell] has proposed that the federal government subsidize mortgages with a fixed interest rate of 4 percent to 4.5 percent. Fannie Mae and Freddie Mac, the two government-controlled mortgage-finance companies, would use their buying power in the mortgage market to drive the rates down....

The low rates would be open to any “creditworthy” borrowers, which would probably exclude many if not most homeowners who are now facing foreclosure. But supporters of the plan argue that it would help lift housing prices, which would make it easier for troubled homeowners to either refinance or sell their houses.

But senior Democratic lawmakers are staunchly opposed to the plan, warning that the costs could climb as high as $1 trillion.

Translation: Responsible, middle-class folks who have been scraping by, but are feeling strained because of the condition of the broader economy have no place in the Democratic agenda.

Isn't this the best reason you've heard so far for supporting the McConnell plan?

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Does McConnell and the GOP really believe that lowering mortgage rates from their current rate (hovering around 5%) to 4.5% will impact home sales? Seriously? Home inventories are not going to decrease until prices come down and stabilize and buyers regain confidence...oh, and the banks that recieved TARP funds actually use them to lend.

We need to stop looking at "solutions" that keep home prices artificially inflated. Let them find their own price bottom and END so-called "affordable housing" mandates that have contributed to this mess!

Posted by: jp at February 4, 2009 11:41 AM

I think that decreasing the mortgage interest rate will prop up house prices. In the early 80's, the reverse happened. With 18% Jimmuh Carter mortgage rates, house prices were substantially discounted.

Is it a good thing to do? Answer this question - who will buy our houses? Our bail-out-o-rama will leave the rising generations who would like to buy them instead saddled with that debt in one fashion or another. So eventually, the prices will find an appropriate level anyway.

A house is not a retirement plan.

Posted by: chuckR at February 4, 2009 6:11 PM

"We need to stop looking at "solutions" that keep home prices artificially inflated. Let them find their own price bottom "

Hard truth that neither party will accept. Instead they will jointly print trillions of dollars and debase the dollar to Third World levels.
Why not. They have both, with their joint open borders policies, created a country which will be majority Third World within 20 years.
I'm sure glad that I have dual citizenship and a bright red EU passport for myself and my kids.

Posted by: Mike at February 4, 2009 7:19 PM

Todays WSJ has an article called "The Republican Fannie Mae" that addresses this very issue.

Posted by: jp at February 6, 2009 12:35 PM
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