At a campaign event in Detroit on Wednesday, Vice President Joe Biden said that “it won’t cost the government a penny” to help 12 million Americans refinance their homes.
“We helped millions of families modify their mortgages so they could stay in their homes, and we helped more than a million refinance their mortgages saving $3,000 a year, but guess what?” Biden said. “We could do it for another 12 million if the Republicans would just get out of the way, just get out the way. Right? Just get out the way. And it won’t cost the government a penny.”
Wrong.
Such refinancing would cost taxpayers, who bailed out companies like Fannie Mae and Freddie Mac, billions of dollars. The government would lose future revenues. Investors who invested in mortgage-backed securities would lose money. Taxpayers could make their money back in the long run if less people default, but that does not mean there won’t be short-term costs.
It is this type of mentality — and ignorance — that leads to the Obama administration’s investing billions of dollars of taxpayer money into companies like GM, which some believe are on the verge of another bankruptcy.
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