Government Staying in the Mortgage Business
Guinevere Nell /
Despite their key role in creating the housing crisis, Fannie Mae and Freddie Mac are not being reformed, and will continue to cost the American taxpayer huge sums of money for the foreseeable future. There will be a housing summit on Tuesday, but its already clear that the federal government will remain in the mortgage business, despite the scandals that have emerged. Bailouts of the mortgage giants have already cost the taxpayer $111 billion, and the Congressional Budget Office projects they will cost another $290 billion this year alone. (This is not counting the interest that will have to be paid since this money is borrowed.)
Sometimes it’s hard to even comprehend numbers this large, so a breakdown of this cost using the Center of Data Analysis Individual Income Tax model may be useful. About 44 percent of federal revenue comes from individual income taxes. 44 percent of $111 billion and $290 billion is still large enough to constitute a fair little chunk of personal income tax paid. This is how it breaks out by demographic group.
Such a huge cost, and for what? To bail out and subsidize companies that, along with $120 billion annually in housing tax breaks, drove a bubble in housing that has nearly taken the economy down with it.