Freedom Line Blog

Skim through this week’s commentary pieces here at CFIF, and you’ll notice that all of us at the Center are incensed by President Obama’s recess appointments to the NLRB and the Consumer Finance Protection Bureau yesterday, all of which seemed to clearly overstep the president’s constitutional authority.

According to the invaluable James Pethokoukis, however, we ain’t seen nothing yet. Writing at the American Enterprise Institute’s Enterprise Blog, Pethokoukis notes that there’s an ominous implication from yesterday’s appointments — that the president could use a similar tactic to appoint a new head of the Federal Housing Finance Agency. He writes:

And why is that important? The Federal Housing Finance Agency is the regulator and conservator of Fannie Mae and Freddie Mac. And the FHFA currently has an acting director, Edward DeMarco. If Obama replaces him with a “housing advocate” via the same recess appointment process, here’s what might happen next, according to [the Washington Research Group’s Jaret] Seiberg:

“That could lead to a mass refinancing program for agency-backed mortgages that would go well beyond the existing HARP program. That could hurt agency MBS pricing and result in higher financing costs going forward. Yet it also could be a big boost for the economy and housing going into the election.”

Indeed, my sources tell me the Obama administration has been eager to implement just such a plan, but needs to have its own man heading the FHFA to make it happen.

There are more grisly details in Pethokoukis’s original post. The upshot? President Obama — without approval from Congress — could commit taxpayers to a quarter-trillion dollars of spending in order to bail out imprudent homeowners in an election year. Essentially, we’d all be financing the president’s reelection campaign. And, in a tight race, the resulting bribe stimulus might just do the trick.

James Pethokoukis, Money and Politics columnist and blogger for Reuters, notes that the FCC’s decision to proceed with a process of imposing so-called Net Neutrality rules on Internet network providers is not only “curious as well as wrongheaded,” it could result in the next “systemic risk” for the U.S. economy.

Questioning the wisdom and necessity of strict Internet regulations to be imposed under the false promise of “neutrality,” Pethokoukis wrote:

The financial crisis that has convulsed the global economy for the past two years should be a potent reminder to communications regulators that the best of government intentions can create horrible, though unintended, consequences. …

“Like physicians and Fed governors, the first goal of regulators should be to do no harm. And that is especially true when they are trying to impose a solution in search of a problem. Broadband prices, for one thing, are on the decline. The average cost of consumer broadband has dropped to less than $20 a month from $50 a month in 2001. And more people have access. As late of 2004, 70 percent of households still used dial-up modems for web access. Today, just 10 percent do with broadband speeds doubling over that period. Tough to find a market failure here. …

“But the FCC — with the full encouragement of the Obama administration — nonetheless intends to push forward with seeming little concern about the unintended consequences of intervening into a well-functioning sector vital to the American economy. At the very least, the FCC will likely face years of court battles over the rule that could serve to paralyze the sector. Now there’s your systemic risk.”

Google Chief Executive Eric Schmidt, whose company has been lobbying hard in support of Net Neutrality, admitted recently, “It is possible for the government to screw the Internet up, big-time.”

Perhaps Google and other large corporate content providers who wish to use the heavy hand of government to continue to freeload on the backs of ordinary Internet consumers should heed Schmidt’s warning.