The Heritage Foundation posted an article today about government-sponsored entities (GSEs). These organizations have an off-budget status (excludes them from federal budget rules and processes) which hides their real cost to taxpayers.
The Treasury is keeping Fannie Mae and Freddie Mac, the taxpayer-backed loan guarantee giants, off the federal budget.
How is this possible?
In 2008, the government took control of Fannie and Freddie and agreed to shield the entities from bankruptcy. Now that the country has recovered from that housing crisis, and money is coming back in through these government-sponsored entities (GSEs), their true cost remains hidden.
…It’s jaw-dropping that such massive flows of taxpayer money could be kept outside the federal budget. And as you can imagine, keeping that cash off the books distorts the overall budget picture.
Just for a start, the housing entities’ “profits paid to the Treasury in 2013 alone have resulted in federal spending and deficits being underreported by more than $100 billion,” says Boccia, the Grover M. Hermann Fellow.
This affects public perception of the deficit—and even lawmakers’ perceptions as they make plans to spend more in the coming year’s budget.
The obvious solution to this is to eliminate GSEs. They have become another way that Washington can control more taxpayer money without being held accountable.
There will be an election in November. All of the House of Representatives and one-third of the Senate will be up for re-election. Unless we elect people who will actually represent us and not become part of the Beltway establishment, we will be watching America descend into bankruptcy.