home  |  book  |  blogs  |   RSS  |  contact  |

Is This the Turn? Society and State

print view

Fannie/Freddie and the Stealth Welfare State

by Christopher Chantrill
September 30, 2008 at 11:16 am

|

BACK IN the good old days the US used to spend big money on secret defense projects. And no wonder, for in 1960 defense and the military industrial complex ate up 10 percent of GDP. It was easy to find money for the odd U-2 spy plane or the granddaddy of all “black” projects, the Mach 3 spy plane variously known as the A-12, YF-12, and SR-71 Blackbird.

The trouble with secret programs is that there is no public accountability. You can spend billions of dollars on some brilliant idea and have nothing to show for it. The Mach 3 spy plane worked, probably thanks to the brilliance of Kelly Johnson, head of the Lockheed “skunk works.” But it cost a fortune to develop and a fortune to operate.

Secret defense programs have their place, but surely it is wrong to create secret social programs. The meltdown of Fannie Mae and Freddie Mac demonstrates why. Everybody thought Fannie and Freddie were boring old government-sponsored enterprises dealing in nice safe mortgages for middle-class Americans. Only they weren’t.

You can understand why President Clinton decided to crank up Fannie and Freddie to deliver sub-prime mortgages in the 1990s. It seemed like a great idea to amend the Community Reinvestment Act to bully the banks into lending more money into inner-city areas. And it was certainly a success in political terms. By the end of his administration, Bill Clinton was wildly popular in the African American community. Of course he would be, after sluicing billions of dollars in mortgage money to the house-hungry women of America’s red-lined neighborhoods.

But who really understood what was going on before the whole thing blew up and tossed the nation into a global credit crisis? A few people did, and a few people tried to warn us. A few politicians tried to reform Fannie and Freddie, but they were no match for the lobbyists and the Friends of Angelo.

It is hard enough trying to reform headline programs like public education or Social Security. At least everything is out in the open.

But with stealth programs burrowed into the Community Reinvestment Act our liberal friends are learning to emulate the methods of the cold war Pentagon. They have learned how to keep controversial programs under the radar, and they usually succeed. It’s only when a program blows up that people realize what is going on.

We are going to see more of these meltdowns in the future. Fannie/Freddie isn’t the only government program adapted to serve a hidden agenda.

But how did we get from open and accountable government to the new era of stealth social programs operating under the radar?

Back in the 1930s with the New Deal and in the 1960s with the Great Society liberals were proud to point to all the wonderful programs they were offering to the American people. They even set up programs to measure the inevitable success of their programs, as Charles Murray noted in Losing Ground. Everyone knew that with a few more billions we could end poverty forever.

Then things started to go wrong. Liberals knew by the early 1970s that their job-training programs weren’t working. The work-force participation of minority youths was going down, not up. What should they do? They could manfully own up to their failures or they could disguise them and keep them going under the radar.

When the much-vaunted public-housing projects cratered liberals replaced their public housing projects with less visible Section 8 rent subsidies. When Hillary Clinton’s universal health-care system went down to defeat Democrats expanded smaller-scale projects like S-CHIP. When the American people rejected the idea of a negative income tax in the 1970s liberals responded in the 1990s with the innocuously named Earned Income Tax Credit.

Then there’s the federal disability program. According to the National Bureau of Economic Research Social Security Disability Insurance (DI) has gone from “2.2 percent of adults age 25 to 64 in 1985 to 4.1 percent in 2005.” Study authors David Autor and Mark Duggan expect disability rolls to increase eventually to “almost 7 percent of the non-elderly adult population.”

Conservatives need to develop a political strategy to de-legitimize these stealth programs. Let’s leave aside the argument from compassion that excessive income support programs rip the social fabric asunder and create a non-working underclass. Let’s be practical.

Somehow, these meltdowns always seem to happen on the Republicans’ watch. Then the American people, egged on by the helpful mainstream media, blame the Republicans for the mess. And that ain’t fair.

Christopher Chantrill blogs at www.roadtothemiddleclass.com.

Buy his Road to the Middle Class.

print view

To comment on this article at American Thinker click here.

To email the author, click here.

 

 TAGS


What Liberals Think About Conservatives

[W]hen I asked a liberal longtime editor I know with a mainstream [publishing] house for a candid, shorthand version of the assumptions she and her colleagues make about conservatives, she didn't hesitate. “Racist, sexist, homophobic, anti-choice fascists,” she offered, smiling but meaning it.
Harry Stein, I Can't Believe I'm Sitting Next to a Republican


Racial Discrimination

[T]he way “to achieve a system of determining admission to the public schools on a nonracial basis,” Brown II, 349 U. S., at 300–301, is to stop assigning students on a racial basis. The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.
Roberts, C.J., Parents Involved in Community Schools vs. Seattle School District


Liberal Coercion

[T]he Liberal, and still more the subspecies Radical... more than any other in these latter days seems under the impression that so long as he has a good end in view he is warranted in exercising over men all the coercion he is able[.]
Herbert Spencer, The Man Versus the State


Taking Responsibility

[To make] of each individual member of the army a soldier who, in character, capability, and knowledge, is self-reliant, self-confident, dedicated, and joyful in taking responsibility [verantwortungsfreudig] as a man and a soldier. — Gen. Hans von Seeckt
MacGregor Knox, Williamson Murray, ed., The dynamics of military revolution, 1300-2050


Responsible Self

[The Axial Age] highlights the conception of a responsible self... [that] promise[s] man for the first time that he can understand the fundamental structure of reality and through salvation participate actively in it.
Robert N Bellah, "Religious Evolution", American Sociological Review, Vol. 29, No. 3.


Churches

[In the] higher Christian churches... they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm


Sacrifice

[Every] sacrifice is an act of impurity that pays for a prior act of greater impurity... without its participants having to suffer the full consequences incurred by its predecessor. The punishment is commuted in a process that strangely combines and finesses the deep contradiction between justice and mercy.
Frederick Turner, Beauty: The Value of Values


Pentecostalism

Within Pentecostalism the injurious hierarchies of the wider world are abrogated and replaced by a single hierarchy of faith, grace, and the empowerments of the spirit... where groups gather on rafts to take them through the turbulence of the great journey from extensive rural networks to the mega-city and the nuclear family...
David Martin, On Secularization


Conservatism's Holy Grail

What distinguishes true Conservatism from the rest, and from the Blair project, is the belief in more personal freedom and more market freedom, along with less state intervention... The true Third Way is the Holy Grail of Tory politics today - compassion and community without compulsion.
Minette Marrin, The Daily Telegraph


Moral Imperatives of Modern Culture

These emerge out of long-standing moral notions of freedom, benevolence, and the affirmation of ordinary life... I have been sketching a schematic map... [of] the moral sources [of these notions]... the original theistic grounding for these standards... a naturalism of disengaged reason, which in our day takes scientistic forms, and a third family of views which finds its sources in Romantic expressivism, or in one of the modernist successor visions.
Charles Taylor, Sources of the Self


Drang nach Osten

There was nothing new about the Frankish drive to the east... [let] us recall that the continuance of their rule depended upon regular, successful, predatory warfare.
Richard Fletcher, The Barbarian Conversion


Government Expenditure

The Union publishes an exact return of the amount of its taxes; I can get copies of the budgets of the four and twenty component states; but who can tell me what the citizens spend in the administration of county and township?
Alexis de Tocqueville, Democracy in America


presented by Christopher Chantrill

Data Sources  •   •  Contact