NRD Editor’s Note: The following column originally appeared at TheHill.com.
By Rick Manning — The Washington Post reports that President Obama is pushing banks to make home loans for people who currently don’t qualify. Haven’t we been living in this bad movie for the past six years?
Obama’s idea is a Groundhog Day-like sequel where the government compels a now quasi-nationalized lending industry to give loans to people who have a history of not repaying debt. Because many of those loans are not repaid, the banks inevitably need to be bailed out by the taxpayers, and the very same government that demanded the loans be made then blames the lenders for making them. This is not conjecture; it is the history of the housing bubble and collapse.
Yet, here we go again, with the lure of short-term higher home prices being almost too strong to be offset by the personal and national catastrophe of increased loan defaults along with an all-too-predictable future crushing banking crisis.
This announcement comes on the heels of another official Obama proclamation, where he names the month of April “Financial Literacy Month.” In naming the month, Obama declares, “My Administration is dedicated to helping people make sound decisions in the marketplace.”
You just can’t make this stuff up.
Perhaps telling people to not take loans that they don’t qualify for, can’t afford and have no intention of paying back should be the first sound decision people should make in the marketplace.
But what else could people expect from an administration that promised to cut the deficit in half five years ago but instead has overseen an unprecedented $6 trillion-plus expansion of the national debt during its tenure.
What kind of sound financial decisions could come from an administration that has never run a budget deficit less than a trillion dollars, and admits that its submitted budget never, ever gets to balance, arguing that the budget should not even be expected to be balanced.
Yep, these are the guys who should be telling the American family about financial literacy and responsibility. Dave Ramsey they are not.
Although in some respect, the Obama “logic” makes sense. After all, if everyone paid their bills and got out of debt, those same voters would demand that the government do the same. Difficult spending priorities and choices would have to be made, and being an elected official would not just be playing Santa Claus with other people’s money. That’s no fun.
But what is really no fun is the inevitable down when those other people demand to be repaid, and you become a slave to a lifestyle you could never afford.
April is Financial Literacy Month. The Obama administration should observe it. They should start by reading and following Ramsey’s book The Total Money Makeoverand applying the basic principles of good financial stewardship to their own lives and then our nation’s finances.
Instead, they are urging America to continue a spending splurge under the presumption that we are the ultimate “too big to fail” and the bill will never come due. Unfortunately, it always does.
Rick Manning (@rmanning957) is the vice president of public policy and communications for Americans for Limited Government.