The Homa Files

Strictly my POV:

All of the pundits are saying that the cost of the bailout will hamstring either Obama or McCain — whoever gets elected.  (see http://www.politico.com/news/stories/0908/14027.html)

McCain wouldn’t be able to cut (or hold) taxes;  Obama won’t be able to afford his expensive social programs.  I disagree — especially if Obama’s “$500 for everybody who votes for me” campaign succeeds.

First, Obama will use the cost of the program to justify even more tax increases.  The increases will hit more people and will be bigger.

Second, the $700 billion will become a permanent layer of the national debt.  It will never be paid down.  Any proceeds received from closing, renegotiating or reselling the toxic loans will simply be redeployed to other spending programs.  Think Iraq – it was originally off budget.  Now, there is talk of how to put the $10 billion per month to better use. 

Mark my words.

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This entry was posted on September 29, 2008 at 8:33 am and is filed under Government & Politics, Mortgage Crisis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.