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Reason Alert: Bailout, California Propositions

October 17, 2008

Free Markets Vilified
Reason.com editor Nick Gillespie says there are three big themes being pushed about the bailout. And all three wrongly "share an antipathy toward anything remotely considered the free market and a belief that government intervention is a wise and prudent course."
» Building a Better Bailout at No Cost to Taxpayers
» The Bailout and the Broken Window
» Why the Bailout Isn't Working

You'll Pay for Mortgage Bailout Plan
Sen. John McCain wants to buy up 'bad' mortgages. Reason magazine's Jacob Sullum writes, "This desperate ploy, unveiled at last week's presidential debate, speaks volumes about McCain's readiness to forsake his avowed principles and his supposed commitment to candor. Meant to bribe swing voters with taxpayers' money, it should repel anyone who considers its rationale, its fairness, and its fiscal implications...If a home you bought for $300,000 can now fetch only $200,000, that in itself does not affect your ability to make your monthly payment. You may not like paying off a loan that's higher than the current market value of your house, but that's the chance you took when you invested in this particular asset. If you used an adjustable-rate mortgage to buy the house and the rate has risen, you may now have difficulty making your payments. But that's the chance you took when you picked a lower initial rate over a higher but stable rate. McCain says he would 'buy up the bad home loan mortgages.' Bad from whose perspective?...Somehow McCain knows the market price for homes is not the correct price, so he plans to artificially prop up the value of these assets, benefiting one group of Americans at the expense of others. The straight-talking maverick thereby abandons any pretense of fiscal conservatism, devotion to free market principles, or opposition to pork barrel politics-all to restore 'some trust and confidence back to America.'"
» Radley Balko: How Your Beer Bought John McCain's $500 Loafers
» Balko: Obama's Crime Policy Disappointing

California Headed to a Fiscal Train Wreck
In a column for The Wall Street Journal, Reason Foundation's Shikha Dalmia writes, "With credit markets in New York in crisis last week, California Gov. Arnold Schwarzenegger sent an extraordinary letter to Treasury Secretary Henry Paulson asking for $7 billion. Although the governor has since withdrawn that request, it testifies to the dire state of his budget. Yet days before penning his note, the governor told an audience at the Commonwealth Club of California not to worry about the state's budget crunch and to approve $9.95 billion in new debt on the November ballot to build a bullet train to connect Los Angeles to San Francisco: 'Just because we have a problem with the budget does not mean people should vote 'no' on high-speed rail.' Actually, the state's budget woes should give votes pause -- especially since high-speed rail is a fantasy that has as much chance of delivering on its promises of creating 450,000 jobs, vanquishing road congestion and lowering greenhouse gases as 'Conan the Barbarian' had of winning the Oscar. It seems that California is promising to build a train that is faster, cheaper, more efficient and serves more riders than any high-speed train in the world. And all it has to do to pull off this miracle is defy the laws of economics and physics...Regardless of whether California voters green light this project, Uncle Sam should have no part of it -- either directly by offering California matching rail grants as it is hoping or indirectly by approving any future requests for emergency cash. American taxpayers should not subsidize California's fiscal train wreck."
» Adrian Moore: Hey Buddy, Can You Spare $7 Billion?

Examining the Propositions on California Ballot
California's deficit is expected to be $15 to $18 billion this year. Standard & Poor's has warned that California is under a negative credit watch and its credit rating is already the second lowest in the country. And yet, California taxpayers are being asked to approve another $16.8 billion in borrowing. A new series of reports from the Reason Foundation examines all of the propositions on the state ballot, noting that California's general obligation bond debt nearly tripled from $42 billion in fiscal 2001-02 to $120 billion in 2007-08.
» California General Election: Voter Guide (.pdf)
» Prop 1A CA High Speed Rail Proposal: Due Diligence Report
» Study: Drowning in Debt: Bond Measures Threaten California's Already Precarious Debt Situation (.pdf)
» Study: The Nonviolent Offender Rehabilitation Act (.pdf)
» Study: Redistricting in California: Competitive Elections and the Effects of Proposition 11 (.pdf)
» Analysis of California's Propositions 7 and 10: Renewable Energy Mandates and Handoutsw (.pdf)
» Analysis of California's Proposition 8: Limits on Marriage (.pdf)


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