Restoring the American Dream

Editor's note: Michigan Capitol Confidential offered the four Republican presidential candidates the opportunity to write a column in advance of the Tuesday primary. Former U.S. Sen. Rick Santorum from Pennsylvania and former Massachusetts Gov. Mitt Romney were the only two who responded. Michigan Capitol Confidential is not endorsing any specific candidate. Romney's column can be found here.

By Rick Santorum

Buying a first home and building equity has been a large part of the American dream and remains one of the most cherished experiences for American families.

But sadly, for many American families, that dream has been crushed. The country's housing collapse has resulted in 10 million homes being worth less than their mortgage value. In Arizona, 47 percent is the real and tragic number and in Michigan, it's 35 percent. 

Presidents Bush and Obama didn’t help. The government committed declared 700 financial firms and most of the nation's largest banks as "too big to fail." Through the TARP bailout, the government offered $500 billion to those banks and firms. Unbelievably, Mitt Romney and Newt Gingrich strongly supported this measure. I strongly opposed it.

This dramatic expansion of government was supposed to restore confidence in our largest financial institutions. But the market for mortgage-related securities is still in agony. 

President Obama hasn’t learned from past mistakes. He is committed to Obamanomics,  which grows government, explodes public debt, and slows economic growth and job creation. Now he wants even more government intervention to manipulate interest rates.  The new plan may cost taxpayers hundreds of millions, perhaps billions.

Understandably, families who once thought about buying first homes are scared. I will restore their confidence in housing with my pro-growth economic plan, called by the Wall Street Journal “bolder and better” than Mitt Romney’s timid plan.

First, I will eliminate Obama's job-killing regulations and unleash America’s domestic energy potential. We need to promote economic growth boldly to get people back to work.

Second, to help families seeking a fresh start, I would allow deductions from taxable income on losses that come from sale of a principal residence. This will provide relief for families whose homes have lost value.

Third, I will eliminate the federal housing role of Fannie Mae and Freddie Mac within five years. These two mortgage giants shoulder the blame for the housing crisis of 2008 and they will be eliminated. Ten top Fannie and Freddie administrators were paid $12.79 million in bonuses on top of their regular salaries last year. It’s unacceptable that the president has protected Fannie and Freddie.

Fourth, I’ll ask Congress to reform the Federal Reserve and make it transparent. Its loose monetary policy encouraged the housing bubble to grow, then its tight monetary policy made it burst. It picked winners and losers, and bailed out overseas banks with taxpayer dollars.

We should also narrow the Fed’s mandate and set, by law, a target of stable monetary growth. Doing so will focus the Fed on price stability instead of its current role of promoting risky policies which hurt American families and taxpayers.

Fifth, I will repeal the regulatory burdens of Dodd-Frank, which have hurt lending and smaller community banks, affecting the ability of small businesses to survive and create jobs. In classic but tragic Washington incompetence, regulations that applied to the entire financial sector omitted Fannie Mae and Freddie Mac, failed institutions still protected by the Democrats.

It’s hard to imagine the American dream that doesn’t include the opportunity for American families to buy their own home. Past policies have endangered this pursuit. President Obama’s policies continue to make it harder to restore the American dream for many hurting families.  It’s time to get America’s housing market back on the right track.

Rick Santorum served in the United States Senate from 1995-2007.