It is one thing to rob Peter to pay Paul, but doing it for the sake of government tax revenue defies common sense.
CBS’s March 14 “The Early Show” had yet another downbeat story about the troubled housing market. This time instead of just the usual bellyaching of homeowners who got in over their heads, the report featured some “solutions.”
The solution came from regularly pessimistic economist Mark Zandi of Moody’s Economy.com. Ironically, Zandi was optimistic about the government’s ability to intervene and slow the problem – with taxpayer money.
“They’re very difficult to tackle these – but I think they are coming forward with plans that eventually will have some benefit,” Zandi said. “But they do need to do more. I do think this is a very large problem, and it’s going to require a big answer – probably taxpayer money at the end of the day and I think we’re headed down that path.”
It’s been a controversial subject – using taxpayer money to assist troubled homeowners, but Zandi rationalized the idea with some seemingly backwards math. He said a taxpayer bailout would save taxpayers money due to lost tax revenue.
“I mean, it’s reasonable to say that they don’t want to put taxpayer money on the line,” Zandi said. “Nobody does. But I think we’re at a point where if we don’t try to alleviate the problems in the housing and mortgage markets, take some of the pressure off people who are losing these homes, that the economy will be in recession, and we’ll lose more in taxpayer money because of the lost tax revenue, than it would cost to help them out. So I think we're at that point.”
Also on March 14, Zandi predicted on CNBC’s “Power Lunch” the housing crisis would extend through 2009, possibly to the end of the decade.