October 2019
When I was a kid in the 50s, it was common for local TV stations to produce kids’ shows. WBZ in Boston (Channel 4) had two. One featured “Rex Trailer” and his horse (I had the thrill of helping chase that horse down when it got loose while I was delivering newspapers near the WBZ studio in Allston early one Sunday morning).
The other program was “Big Brother Bob Emery.” Every day, Emery drank a toast to the president (milk) and sang this song:
The grass is always greener in the other fellow’s yard.
The little row we have to hoe,
Oh boy that’s hard.
But if we all could wear green glasses now,
It wouldn’t be so hard
To see how green that grass is,
In our own back yard.
I thought of that song recently as I listened to a first-time home buyer complain about welfare queens:
“Why does the government help people who don’t work? I should get help instead.”
I realized as she spoke that she had no idea how much of a subsidy the government had just given her as a first-time home buyer. Without that subsidy, she is unlikely to have been able to buy her home, and if she had been able to buy it she wouldn’t have been able to get a 30-year loan; nor is she likely to have received a fixed interest rate. In addition, her interest payments and property tax are deductible on her income tax.
Why didn’t she know this? Because except for the tax deduction, the subsidy is indirect. Fannie Mae and Freddie Mac, as they are called, use the power of government to guarantee about half the loans that banks and non-bank lenders make. Without those guarantees, mortgagors would require large down payments and shorter terms (10 years or less), and almost certainly a variable interest rate.
When he ran, Donald Trump promised to get the government out of the mortgage business and return it to private hands. But his economists cannot figure out a way to privatize mortgages that won’t cause a significant increase in costs to the middle class.
Government subsidies are everywhere. Many benefit mostly upper income people. Right now, for example, Chatham is planning to spend $10 million improving its airport (did you know Chatham had an airport?). 95% of that money will come from the federal government, in addition to the operating subsidies that Chatham (and hundreds of other private airports receive) from both federal and state sources.
Chatham Airport handles no commercial airline traffic, just private planes, and is only 20 miles or so from Barnstable Airport (also government subsidized), which is served by several airlines. Why do we need it? Many of the Chatham Airport’s neighbors would be happy to see it close.
It is true that millions of lower-income residents receive government help. There are 11 million Americans getting social security disability (SSDI) and millions more benefiting from Medicaid. It is understandable that hard-working middle-class people who have trouble making ends meet might be envious. But the answer is not to take aid away from those who cannot cover their expenses. The answer is to provide help for all those who need it.
We should use government to make sure that every American gets decent housing, healthy food and a good education.
