Thanks to a tip from Anthony in Los Angeles, commenting on Sister Toldjah, I found this graph on Michelle Malkin’s site.
It really is simple: if you did the right thing, and bought within your means, and are keeping up with your mortgage payments, you have the exquisite pleasure of bailing out those who did the wrong thing, and bought above their means, and have fallen behind in paying their bills. Still, if you are a homeowner who has kept up with your mortgage, at least you get to deduct your property taxes and mortgage interest on Schedule A of your Form 1040; if you are a renter, you really do pay property taxes — they’re simply hidden in your rent — but you don’t get that deduction, and your don’t get a mortgage interest deduction.
Now, I’m not real thrilled with paying for welfare. As far as I am concerned, welfare is a trap, and it encourages people not to work. But at least when it comes to welfare, I can take some solace in the fact that it is supposed to go to poor people, people who would go hungry and cold without help.
But this isn’t welfare to help the poor; this is welfare for the well-to-do; they just aren’t quite as well-to-do as they thought they were! This is welfare for people who bought bigger and nicer houses than they could afford, people who thought they were moving up in the world, and over-bought.
When we bought our current house, in 2002, we didn’t over-buy. In fact, given our income, we actually under-bought; we paid less than one year’s gross income for our home, and owe less than one year’s net income. We also knew that the empty nest years were approaching, and it simply made sense to buy the price and size we did. Yet now it looks like, due to our being responsible, we’ll have the pleasure of subsidizing someone else’s McMansion.
One point that isn’t made very often, and needs to be: the people who sold the over-priced houses to the people now in trouble already have their money! They got their money from the original lender, plus whatever down payment was made by the buyer. This bailout will hurt the mortgage-holders, who aren’t going to be repaid for everything they thought they would, and who may take a loss, but the seller already has his money, and his profit.
Unfortunately, the source I use concerning the 2008 vote breakdown didn’t differentiate between renters and homeowners, but I’d be willing to bet that President Obama got much of his margin from renters; they are generally poorer (Barack Obama and John McCain split the $50,000 and over vote, 49%-49%, but Mr Obama dominated poorer voters, 60% to 38%) and more heavily minority than homeowners (Mr McCain won the white vote, 55% to 43%, while Mr Obama carried minority voters by a wide margin.) But it looks to me as though it will be the people who gave Mr Obama his electoral victory who will be paying the most — and getting the least — from this mortgage bailout.
Schadenfreude, indeed!
I always wondered why I have to bail people out who made not just poor decision, but extremely unwise decisions. What’s the payout to those who acted responsibly all their lives. Oh, that’s right, the reward is to finance the irresponsible. I think it comes under the title of SUCKER!
Ethics? What’s that? Can I buy some somewhere? What do they do?
Er, Dana – you need to read this book. You’ll be able to complain far more effectively about middle-class welfare.
http://sightsonpennsylvania.blogspot.com/2009/02/tea-party-part-ii-commonsensepoliticalt.html
Dana, just wanted you to know that I referenced this post. I explained to my wife today that the “habituals”, people who will always be behind in the mortgage because they were never taught or never learned fiscal manangement of their resources, will never be helped not matter how much money the government throws at them. Five years down the line they will be in the same situation. That excludes people who have unfortunate circumstances dictating their plight. However, it should be an important lesson about saving for a rainy day, not spending before the rainy day comes.
Thanks, Mr McGruff. My mortgage is always paid, on time, because it comes directly out of my checking account on the 10th of every month. That’s my “habitual.”
Of course, if I were smarter, I’d quit paying my mortgage, and maybe I can get President Obama to pay it for me.
In fact, given our income, we actually under-bought; we paid less than one year’s gross income for our home
There are zero properties other than mobile homes within the nine county bay area which cost less than one year’s gross income for my husband and me. This isn’t because we’re poor; I’m a middle class software engineer able to pay for part-time law school out of my income.
Aphrael: The “normal” idea is that you shouldn’t buy more than thrice your gross annual income. If Jared and you make $100,000 between you (just a guess, people, I don’t know), that would make a $300,000 home at the top end of reasonable for you.
If Jared and you make $100,000 between you (just a guess, people, I don’t know), that would make a $300,000 home at the top end of reasonable for you. Dana
This would be with nothing down. If there was the old standard of 20% down, there would be an equity cushion that would make it more difficult for the buyer to get ‘upside down’ on their loan.
The root of the crisis was the concoction of ‘innovative loans’ that no thinking person would consider. ‘Variable rate’ loans with ‘negative amortization’ got a lot of people in trouble as their monthly payment escalated to a multiple of the original amount.
Should we reward stupidity?
“The root of the crisis was the concoction of ‘innovative loans’ that no thinking person would consider. ‘Variable rate’ loans with ‘negative amortization’ got a lot of people in trouble as their monthly payment escalated to a multiple of the original amount.
Should we reward stupidity?”
Bingo! I remember radio ads and infomercials a few years back that were unbelievable. They were of the “too good to be true” variety, yet apparently we had plenty of folks both stupid enough to offer them and stupid enough to take those offers.
People were stupid and greedy, both the lenders and borrowers. They took risks and got screwed over. Now Obama and Congress want the rest of America to bend over and take one for the team. We’re doing more than just rewarding stupidity, we’re punishing those who worked hard and did the right thing.