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The most terrifying words in the English language

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POSTED June 15, 2010 2:21 a.m.
The most terrifying words in the English language are: I’m from the government and I’m here to help.” - Ronald Reagan

There are at least 14 instances in Manteca where real estate agents have indicated people in the past several years have simply walked away from their homes. It wasn’t because they couldn’t afford to make payments. It was because they chose not to keep paying for a house that was less than what they owed on it.

Typical was in a neighborhood in north Manteca where the borrower - a single man with a six-figure income - didn’t like the fact he was paying $3,100 a month for a home that was dropping in value and worth less than what he paid for it.  He could rent an almost exact carbon copy in the same neighborhood that had been foreclosed on and fixed up for $1,200.

He continued to pay his obligation that he could well afford until Congress opened the barn door. That is when they passed legislation creating a period of time where people could walk away from homes and not suffer any tax consequences. If a bank gets $50,000 less for a home when it resells it than what you owed when you walked away, the IRS typically treats that as taxable income.

Once the tax consequences were lifted, the man walked and moved into the rental. It was the last thing a housing market already under duress needed.

When Congress was debating this law and Jerry McNerney said he’d support it, it was mentioned in a column that it was irresponsible to make such a move without attaching a qualification requirement. That would have meant taxpayers proving they had no choice but to let their home go as they had inadequate income to make the payments.

This prompted McNerney’s then press secretary to rip into me over the column I penned saying that I couldn’t possibly believe what I had written and that people would not do what I was saying they would do.

This, by the way, is not meant to cast dispersions on McNerney’s competency as he was joined by one heck of a lot of other Democrats and Republicans in rushing to embrace suspending the tax consequences of short sales for everyone. It is meant to demonstrate on how difficult it is for our elected leaders to get anything right.

Our elected leaders in Sacramento and Washington, D.C. are only as effective as the people they surround themsleves with. Here was a young man in his mid-20s, gung-ho, ideological, and probably not very well paid with the ability to influence one of 535 votes that have a true say in how this country is run.

In our somewhat heated conversation I discovered he had no idea about the make-up of the district - especially Manteca, Lathrop, and Stockton - or any feel on the foreclosure mess. Granted he was the press secretary but he was passionately defending his boss’ position.

He also seemed to have no grasp of tax laws and how more than a few people benefit from Congress’ generosity with money via the tax code.

I’m not going to say he wasn’t worldly because no one - myself or someone 90 years old - comes even close to knowing everything or even a fraction of the answers.
What unnerved me was how defensive he was from simple criticism of a vote his boss was going to cast. How, I had to ask myself, can real give-and-take debate take place on critical issues of the day to get to the best possible solution if the response to those who disagree with you is to simply try and shout them down.

Congress throws a lot of mud on the wall in a typical year trying to make it stick in search of the solution to a repertoire of issues from national security and education to the economy and entitlements. One would hope that the mud that was tossed had the right consistency to work but that would involve a quaint concept called “compromise.”

The problem with ramming things through the process is the consequences are never fully thought out. How much harm would it have been to have a condition on the short sales tax penalty being lifted to require a financial qualification test like we do with most other government entitlements?

Instead, the governments - or more precisely those trying to make themselves look good for the next election cycle - rush to judgment.

It also doesn’t help that those advising them are as much removed from the day-to-day life of America as they are themselves.

Of course, in our endless demand to have it both ways - wanting government to let us take risks to sweeten our bottom line and then when we overshoot the runway to have government bail us out - we have created a Congress that is giving us exactly what we deserve.

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