Time to break up Fannie and Freddie
September 9, 2008 | By Nathaniel Ward
At what may be a monumental cost to American taxpayers, the federal government has seized control of financial behemoths Fannie Mae and Freddie Mac, two vestiges of Lyndon Johnson's Great Society that subsidize mortgages. Many analysts have deemed their instability a threat to the American economy.
Now that the seizure is official, some planners on the Left support growing government control over mortgages and housing even further.
But that's not the right solution. Heritage experts chart out what the government's next steps should be—starting with the break-up and privatization of Fannie and Freddie.
"The next President and Congress should allow Fannie and Freddie in their current form to wither to extinction," J.D. Foster, David John and Stephen Keen argue. "The private sector is ready, well-prepared, and subject to the proper incentives to continue to ensure a steady flow of correctly priced capital to America's housing markets."
The Fannie and Freddie takeover is the latest case of politicians disregarding free enterprise ideals when politically expedient, the International Herald Tribune reports. That's why it's so important that The Heritage Foundation continue its work to educate lawmakers about the importance of holding true to these principles.
— David Talbot
Repeating past energy mistakes
The high cost of energy, driven in part by artificially limited supply, is of concern to many Americans and continues to drive debates in Washington and on the campaign trail. Unfortunately, a leading bipartisan proposal on energy prices doesn't do anything to solve the problem, Heritage experts report.
Heritage's Ben Lieberman explains that the proposal from the so-called Gang of Ten just repeats old failures.
It "continues in the tradition of past energy bill failures by neglecting to include very much new energy. The offshore provisions provide little new oil and natural gas and fall well short of what should be done, while the rest of the bill offers federal micromanagement of energy markets and tax increases likely to do more harm than good."
The bill also addresses nuclear energy. But there, too, Jack Spencer and Nick Loris report, the "proposals need improvement." They suggest that "the government should focus on ways to reduce risk associated with the past and provide the proper oversight while allowing the private sector to rebuild the industry and develop solutions for the future."
Congress should stop wasting its energy on red-tape, command-and-control energy policies.
— David Talbot
Other Heritage work of note
First Principles. Those who care about free and fair elections should volunteer to be polling station monitors to ensure there is a better factual record of voter fraud, John Fund of the Wall Street Journal told Heritage's Conservative Bloggers' Briefing.
Education. To help educate the most important decision-makers in education — parents — Heritage experts Dan Lips, Jennifer Marshall, and Lindsey Burke compiled A Parent's Guide to Education Reform. The 36-page booklet, which is being distributed free in collaboration with talk radio hosts Sean Hannity and Laura Ingraham, rounds up the case for giving parents choice over their children's schools. Education is one of the ten cornerstone initiatives of Heritage's decade-long Leadership for America campaign.
Entitlements and Entrepreneurship. In a new analysis, Brian Riedl debunks ten myths about budget deficits and debt, including the liberal myth that the 2001 and 2003 tax cuts caused today's budget shortfalls. He also notes that the problems stemming from the current deficits pale in comparison to the problems caused by runaway government spending on entitlement programs.
American Leadership. What is on India's horizon? Heritage President Ed Feulner thinks a lot. His first trip to India was enough to convince him "that if India continues on its reform path, it will become a very important player on the international scene, and a vital advocate for freedom around the globe." The Heritage Foundation's annual Index of Economic Freedom puts India's economic success in context. In the last three years, India has improved its rank in the Index by 17 places, demonstrating that an open economy operating under the rule of law yields strong economic growth.
In other news
- As part of a bill to fund the Department of Defense, liberals hope to include legislation extending "hate crimes" to cover gender and sexual orientation.
- Wilmington, N.C. has become the first city in the nation to convert its broadcast television signals to a digital format. The federal government ordered all broadcast television stations to make the switch by next February. The costly change requires every existing television receiving broadcast signals to use a special converter box—and taxpayers are picking up the tab for this equipment.
- United Nations bureaucrats have devised another scheme to save the planet from global warming: change the human diet. If we simply ate less meat, they explain, greenhouse gas emissions would be cut.
- North Korean despot Kim Jong Il may have suffered a stroke within the past month, the Wall Street Journal reports. The communist dictator failed to take part in his nation's 60th anniversary celebrations Tuesday.
- Supreme Court Justice Clarence Thomas says he's unsure if affirmative action programs are truly constitutional and that minorities may be better-served by color-blind policies. Justice Thomas adds that affirmative action "has become this mantra and there almost has become this secular religiosity about it. I think it almost trumps thinking."
Coming up at Heritage
To attend these or any other events at Heritage please RSVP at Heritage's website. Or you can view these events live online. All times are Eastern.
- On Wednesday, September 10 at 11:00 a.m., panel of experts discusses the future of Medicare Advantage, a glimmer of free enterprise in the bloated and inefficient entitlement program.
- On Tuesday, September 16 at 11:00 a.m., a small panel including Frank Gaffney makes the case for missile defense.
Nathaniel Ward is the Editor of MyHeritage.org—a website for members and supporters of The Heritage Foundation. David Talbot contributed to this report.