Thursday, August 26, 2010

Misdirection On Two Issues

This post is not about the Social Security trust fund but....

Daily Howler's Bob Somerby refers to a Gallup survey from July which found " Six in 10 Americans who have not yet retired believe they will get no Social Security benefits when they retire, more pessimistic than at any time since Gallup began asking this question in 1989." Continuing his campaign (usually justified, sometimes not) against liberals who sell out their principles to advance their career, Somerby points out

Tremendous energy has been invested in making Americans voters believe that there is something odd about the process which created this so-called fund. In fact, the story is simple, and here it is: In the past three decades, the United States government has borrowed lots of money, from many different sources. It has borrowed money from the Social Security trustees (those pre-planned over-payments). It has borrowed money from big Chinese banks, and from many other sources.

You may not like the fact of this borrowing, but this borrowing has occurred. And guess what? The money all gets paid back! No one will ever tell those Chinese banks, “Sorry, we can’t pay you back. The money isn’t there –it’s already been spent!” But the loans from those payroll tax over-payments are no different from the loans from the Chinese. The money was borrowed, just as Reagan designed. And now, it will all be paid back.

Decades of aggressive, skilled effort have gone into that Gallup result. The conservative world invented a series of slick, slippery scams—and the liberal world slept in the sun. The fruit of that pairing can be seen in the numbers who think they won’t ever see any benefits. It may also be seen, in coming months, in new cuts to the program.

Sixty percent of Gallup respondents said they would never get any benefits! People like that are ripe for the slaughter—and decades of skilled, unrebutted disinformation went into preparing the feast. That said, we liberals have remarkable skill at failing to see how things really work.

It's not only Social Security about which professional conservatives have been bamboozling Americans. I've seen no polls, but if 100 Americans were asked whether the federal government played a major role in our economic collapse by aggressively encouraging individuals to buy homes when they were unable to do so, a sizable number would agree. Blameworthy are people like Rush Limbaugh, who on Monday ("The New American Dream: Renting Your House") claimed

In fact, the regime, forget who it is, I've got in the stack here, someplace the regime is saying that the American dream is now renting a house. You know, home ownership is fini, the American dream is now renting. People should have rented in the first place. This is from people who gave us the subprime mortgage crisis, encouraging people who had no business getting a loan to go out and buy a house they had no business buying because everybody knew that they would never be able to repay it.

Who are these people? President Obama? Rahm Emanuel? David Axelrod? Barney Frank? Chris Dodd? The entire Department of Housing and Urban Development? No one really knows, because Rush doesn't say, because Rush characteristically has no facts.

Generally, when conservatives repeat this myth- it was the government's fault!- they are alluding to the Community Reinvestment Act, enacted in 1977, decades before the sub-prime mortgage crisis. Most high-cost loans were made by independent mortgage banks or bank affiliates, which are not covered by the CRA. The CRA did have a minor impact- but only because in the 2000s, the act was weakened through regulatory and legislative reform, gutting enforcement of the law. These changes, opposed by community groups and some Democratic officials, were sought by industry and undoubtedly praised by Rush Limbaugh- if he even knew the CRA existed.

The right similarly exaggerates the role of Fannie Mae and Freddie Mac in the housng crisis. These companies were never involved in the commercial real estate business, yet over half of all commercial mortgages due before 2014 were underwater as of October, 2009.

Another target of conservative myth-makers is Representative Frank, and not only because he is openly gay, Jewish, and a bad dresser. GWB economic adviser and tax-cut architect Lawrence Lindsey, though, has written "in fact, Rep. Barney Frank (D., Mass.) is the only politician I know who has argued that we needed tighter rules that intentionally produce fewer homeowners and more renters. Politicians usually believe that homeownership rates should- must- go even higher."

Corporate shills like Limbaugh will never attribute responsibility to the huge investment banks, which popularized exotic financial instruments, or to the banks which promoted destructive NINJA loans. Nor will they raise the topic of racial discrimination by financial institutions such as Wells Fargo, which reportedly "pushed customers who could have qualified for prime loans into subprime mortgages" and whose " employees had referred to blacks as 'mud people' and to subprime lending as 'ghetto loans.'"

When Limbaugh decried public officials "encouraging people who had no business getting a loan to go out and buy a house they had no business buying," he should have been thinking of Lindsey's boss, whom the New York Times reported

pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

It's a little better with housing than with Social Security. With the latter, the mainstream media is actively pushing the myth of insolvency; with the former, it is merely looking the other way in pursuit of a "balanced" approach that denies historical reality.

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