Fanniefreddie And The Stealth Welfare State - Road to the Middle Class

BACK IN the good old days the US used to spend big money on secret defense projects. And no wonder, for in 1960 defense and the military industrial complex ate up 10 percent of GDP. It was easy to find money for the odd U-2 spy plane or the granddaddy of all “black” projects, the Mach 3 spy plane variously known as the A-12, YF-12, and SR-71 Blackbird.

The trouble with secret programs is that there is no public accountability. You can spend billions of dollars on some brilliant idea and have nothing to show for it. The Mach 3 spy plane worked, probably thanks to the brilliance of Kelly Johnson, head of the Lockheed “skunk works.” But it cost a fortune to develop and a fortune to operate.

Secret defense programs have their place, but surely it is wrong to create secret social programs. The meltdown of Fannie Mae and Freddie Mac demonstrates why. Everybody thought Fannie and Freddie were boring old government-sponsored enterprises dealing in nice safe mortgages for middle-class Americans. Only they weren’t.

You can understand why President Clinton decided to crank up Fannie and Freddie to deliver sub-prime mortgages in the 1990s. It seemed like a great idea to amend the Community Reinvestment Act to bully the banks into lending more money into inner-city areas. And it was certainly a success in political terms. By the end of his administration, Bill Clinton was wildly popular in the African American community. Of course he would be, after sluicing billions of dollars in mortgage money to the house-hungry women of America’s red-lined neighborhoods.

But who really understood what was going on before the whole thing blew up and tossed the nation into a global credit crisis? A few people did, and a few people tried to warn us. A few politicians tried to reform Fannie and Freddie, but they were no match for the lobbyists and the Friends of Angelo.

It is hard enough trying to reform headline programs like public education or Social Security. At least everything is out in the open.

But with stealth programs burrowed into the Community Reinvestment Act our liberal friends are learning to emulate the methods of the cold war Pentagon. They have learned how to keep controversial programs under the radar, and they usually succeed. It’s only when a program blows up that people realize what is going on.

We are going to see more of these meltdowns in the future. Fannie/Freddie isn’t the only government program adapted to serve a hidden agenda.

But how did we get from open and accountable government to the new era of stealth social programs operating under the radar?

Back in the 1930s with the New Deal and in the 1960s with the Great Society liberals were proud to point to all the wonderful programs they were offering to the American people. They even set up programs to measure the inevitable success of their programs, as Charles Murray noted in Losing Ground. Everyone knew that with a few more billions we could end poverty forever.

Then things started to go wrong. Liberals knew by the early 1970s that their job-training programs weren’t working. The work-force participation of minority youths was going down, not up. What should they do? They could manfully own up to their failures or they could disguise them and keep them going under the radar.

When the much-vaunted public-housing projects cratered liberals replaced their public housing projects with less visible Section 8 rent subsidies. When Hillary Clinton’s universal health-care system went down to defeat Democrats expanded smaller-scale projects like S-CHIP. When the American people rejected the idea of a negative income tax in the 1970s liberals responded in the 1990s with the innocuously named Earned Income Tax Credit.

Then there’s the federal disability program. According to the National Bureau of Economic Research Social Security Disability Insurance (DI) has gone from “2.2 percent of adults age 25 to 64 in 1985 to 4.1 percent in 2005.” Study authors David Autor and Mark Duggan expect disability rolls to increase eventually to “almost 7 percent of the non-elderly adult population.”

Conservatives need to develop a political strategy to de-legitimize these stealth programs. Let’s leave aside the argument from compassion that excessive income support programs rip the social fabric asunder and create a non-working underclass. Let’s be practical.

Somehow, these meltdowns always seem to happen on the Republicans’ watch. Then the American people, egged on by the helpful mainstream media, blame the Republicans for the mess. And that ain’t fair.

Christopher Chantrill blogs at americanmanifestobook.blogspot.com.

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Responsibility

Seeckt: "to make of each individual member of the army a soldier who, in character, capability, and knowledge, is self-reliant, self-confident, dedicated, and joyful in taking responsibility [verantwortungsfreudig] as a man and a soldier."
MacGregor Knox et. al., The dynamics of military revolution, 1300-2050

Living the Virtues

When recurrently the tradition of the virtues is regenerated, it is always in everyday life, it is always through the engagement by plain persons in a variety of practices, including those of making and sustaining families and households, schools, clinics, and local forms of political community.
Alasdair MacIntyre, After Virtue

Moral Imperatives of Modern Culture

These emerge out of long-standing moral notions of freedom, benevolence, and the affirmation of ordinary life... I have been sketching a schematic map... [of] the moral sources [of these notions]... the original theistic grounding for these standards... a naturalism of disengaged reason, which in our day takes scientistic forms, and a third family of views which finds its sources in Romantic expressivism, or in one of the modernist successor visions.
Charles Taylor, Sources of the Self

US Life in 1842

Families helped each other putting up homes and barns. Together, they built churches, schools, and common civic buildings. They collaborated to build roads and bridges. They took pride in being free persons, independent, and self-reliant; but the texture of their lives was cooperative and fraternal.
Michael Novak, The Spirit of Democratic Capitalism

Society and State

For [the left] there is only the state and the individual, nothing in between. No family to rely on, no friend to depend on, no community to call on. No neighbourhood to grow in, no faith to share in, no charities to work in. No-one but the Minister, nowhere but Whitehall, no such thing as society - just them, and their laws, and their rules, and their arrogance.
David Cameron, Conference Speech 2008

Faith and Politics

As far as the Catholic Church is concerned, the principal focus of her interventions in the public arena is the protection and promotion of the dignity of the person, and she is thereby consciously drawing particular attention to principles which are not negotiable... [1.] protection of life in all its stages, from the first moment of conception until natural death; [2.] recognition and promotion of the natural structure of the family... [3.] the protection of the right of parents to educate their children.
Pope Benedict XVI, Speech to European Peoples Party, 2006

Never Trust Experts

No lesson seems to be so deeply inculcated by the experience of life as that you should never trust experts. If you believe doctors, nothing is wholesome: if you believe the theologians, nothing is innocent: if you believe the soldiers, nothing is safe. They all require their strong wine diluted by a very large admixture of insipid common sense.
Lord Salisbury, “Letter to Lord Lytton”

Conservatism's Holy Grail

What distinguishes true Conservatism from the rest, and from the Blair project, is the belief in more personal freedom and more market freedom, along with less state intervention... The true Third Way is the Holy Grail of Tory politics today - compassion and community without compulsion.
Minette Marrin, The Daily Telegraph

Class War

In England there were always two sharply opposed middle classes, the academic middle class and the commercial middle class. In the nineteenth century, the academic middle class won the battle for power and status... Then came the triumph of Margaret Thatcher... The academics lost their power and prestige and... have been gloomy ever since.
Freeman Dyson, “The Scientist as Rebel”

Government Expenditure

The Union publishes an exact return of the amount of its taxes; I can get copies of the budgets of the four and twenty component states; but who can tell me what the citizens spend in the administration of county and township?
Alexis de Tocqueville, Democracy in America

Conservatism

Conservatism is the philosophy of society. Its ethic is fraternity and its characteristic is authority — the non-coercive social persuasion which operates in a family or a community. It says ‘we should...’.
Danny Kruger, On Fraternity

Postmodernism

A writer who says that there are no truths, or that all truth is ’merely relative’, is asking you not to believe him. So don’t.
Roger Scruton, Modern Philosophy

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