By now almost everyone knows about the housing loan giants Freddie Mac and Fannie Mae, but another wasteful government-sponsored enterprise is Farmer Mac, or the Federal Agricultural Mortgage Co. Farmer Mac buys mortgages on farmland. Its loan portfolio is ‘only’ $162 billion, compared to $5 trillion for Fannie and Freddie. But while rising food prices have boosted Farmer Mac’s earnings and stock prices, it is taking a bath on some of its investments, particularly in Fannie Mae and Lehman Brothers. So it recently moved to raise $65 million.

There also are the 12 Federal Home Loan Banks, which finance housing. They are nominally a private cooperative, but have Washington’s implicit backing—along with a debt of some $1.3 trillion. One of them already is losing money and all have lent heavily to banks and thrifts, which are awash in troubled mortgages. As part of its takeover of Fannie and Freddie, the Treasury Department said that it would extend short-term funding to these institutions.

The Government National Mortgage Association, or Ginnie Mae, guarantees mortgage-backed securities backed by federally insured or guaranteed loans. With mortgage-backed securities dropping in value, Ginnie Mae, which is entirely owned by the federal government, has sold the most government-guaranteed debt since 2003.

The Federal Housing Administration guarantees nearly a third of all mortgages in America. But that wasn’t enough for Congress, which enacted a new ‘Hope for Homeowners’ program requiring the FHA to guarantee 400,000 of the worst mortgages. The Congressional Budget Office predicts that a third of them will end up in default. FHA Commissioner Brian Montgomery warns that the program will turn the agency into ‘a less stable, less solvent, more bureaucratic entity.’

These are only a start, however. There are the Small Business Administration’s multiple programs, the Indian home loan guarantee program, the air carrier guarantee loan program, Department of Energy programs, various Department of Agriculture programs, loan guarantees for students and veterans, numerous Housing and Urban Development programs, and more, many more government credit programs.

The federal government is broke. The national debt is nearly $10 trillion. The 2009 deficit was expected to run a half trillion before passage of the $700 billion Wall Street bail-out; the red ink this year alone now is likely to run nearly a trillion dollars. The government owes generous pensions to its retired workers; guarantees pensions for private companies that go belly-up; and faces an unfunded Social Security and Medicare bill of a hundred trillion dollars. Where is the money going to come from? Who is going to buy the government’s debt as Uncle Sam sinks ever more into the red?

This isn’t a liberal or a conservative issue. The government can’t keep spending money with wild abandon. We certainly can’t afford to keep bailing out everyone who makes a mistake in the market. But neither Sen. John McCain nor Sen. Barack Obama will talk about this issue, let alone propose doing anything about it. A vote for either of them is a vote for the status quo. Only a vote for Bob Barr and the Libertarian Party is a vote for the sort of real change that our country needs and deserves.

Libertarian Party presidential candidate Bob Barr represented the 7th District of Georgia in the U. S. House of Representatives from 1995 to 2003.

This entry was posted on Tuesday, October 7th, 2008 at 10:30 am and is filed under Uncategorized .