Obama’s Housing Plan: The Second Time As Farce

One of the dumbest things I’ve heard about Obama’s housing plan was on CNN last night (AC 360 2/20/2008; transcript accessed via Lexis/Nexis):

“TOM FOREMAN: Many who oppose the bill, however, seem to understand it fine. They just think it’s wrong.

(on camera) Opponents argue this plan simply has no clear way to determine if a troubled homeowner added to his mortgage problems by spending too much money on other things, for example, sending his kids to private school or buying expensive cars or taking lavish vacations.”

Anyone who thinks that the mortgage plan should have a way to determine whether the people it’s trying to help sent their kids to private schools or took expensive vacations or put in marble countertops is presumably willing to spend the large sums of money it would take to find that sort of thing out about the 3-4 million people the loan modification program is designed to reach. Moreover, s/he should be willing to accept the serious intrusion into people’s privacy that this sort of investigation into people’s past spending would entail. And s/he should also be prepared to reach many fewer people, since presumably a number of people would not be able to document that all their spending fell within whatever guidelines we deem acceptable.

Back in the Reagan era, I used to marvel at people who would first rail about the excessive size of government bureaucracies and then complain about, say, welfare fraud. (I was all for managing bureaucracies more effectively; it was the people who seemed to resent their very existence who puzzled me.) If you want a program to be able to distinguish the people who actually qualify for welfare from those who don’t, I thought, someone needs to be going through their casefiles. And if you fire all those government bureaucrats, is it any wonder that the people who remain don’t do as good a job making those distinctions?

Same here. If we base decisions about who qualifies for the loan modification program on relatively simple criteria — income, size of loan, other debts and assets — then we can carry it out relatively simply. But if we insist on figuring out whether each and every applicant spent too much on their vacation in the recent past, or renovated their bathroom without a government-approved reason, or violated the Guidelines on Acceptable Countertop Materials that the Department of Housing would need to draw up, or sent their kids to private schools, we should be willing to pay for the army of bureaucrats who will need to pore over people’s financial histories in order to make that kind of determination.

Personally, I’m not willing to pay for any such thing. I’d rather keep my money, or else spend it on something worthwhile, like upgrading the electricity grid or providing better medical care for vets. That means that I need to accept the fact that some deserving people will not be helped, and some undeserving people will be. The best we can do is try to design the best simple way of deciding who will be eligible that we can, while accepting that any simple criterion will get things wrong, and then try to figure out which side we think we should err on.

There are circumstances in which I’d be in favor of erring on the side of letting people who deserve help go unassisted. But for the reasons stated in my last post, these aren’t them.