Mitch McConnell's amendment to porkulus is HORRIBLE.

Cross-posted from IndyMind

Just when you thought that the GOP is back to it's old self after unanimously rejecting the 819 billion porkulus package, in comes minority leader Mitch McConnell. His latest proposal to amend the stimulass package is astonishing. He proposes that the government offers millions of fixed rate mortgages at 4 to 4.5 percent! I am no economist, but upon reading this I threw up a little in my mouth. Just kidding...threw up a lot.As a free market loving, small government wanting fiscally conservative soul I am stunned that this could come out of the GOP. To think that this is what would make McConnell approve this porkulus package is equally saddening. Some of the possible consequences that could arise.


Free market violations: By infusing the market with fabricated rates that do not correspond to the actual bond market is will disrupt an already weakened mortgage market. This is similar to price fixing and something that was done during the Great Depression.
House values: Values will drop even further, despite what Mitch thinks. This might temporarily slow down foreclosures, but it will have the awful long term effect of entrenching owners in their homes. Imagine for a second that you are holding a 4.0% 30-year fixed on your home. You are thinking of moving and learn that rates are now at about 10%. Will you move? NO. This could happen in 3-5 years easily as inflation rears it's ugly head.

Rent control: People will refuse to sell their homes if they are enjoying these kind of rates. In situations where people are ready to move out (ie retirees) to a smaller condo, they will simply rent the home out. With such a small rate in a matter of years renting the home will become extremely lucrative. Nice homes in affluent areas will get run down as houses turn into rental properties.

New construction: New homes sales are already slumping in record ways, because people will be tempted to stay in their existing homes to maintain their attractive rates, sales of new homes will not pick up.

This is just an awful plan, through and through. Minority leader should be ashamed of proposing something as short sighted as this.
If the GOP want to amend this disgusting piece of crap called a stimulass package, they need to propose two things and two things only.

- Lower corporate rates to 15-20%. They want to create jobs? This will create jobs.
- Lower capital gains tax to 5-10%. People concerned about their 401k? Watch the market fly into the stratosphere.

And finally, STOP SPENDING on USELESS projects that provide no growth!