Is Bush’s 2006 Federal Budget a Terrorist Plot?

By: Mary Mostert, Analyst, Banner of Liberty (www.bannerofliberty.com)

February 10, 2005

On the heels of President Bush’s announcement of his proposed 2006 budget, city Mayors gathered in Washington to comment on it. Martin O'Malley, the Democrat Mayor of Baltimore, Maryland stated at their news conference that the president “is attacking American cities.” O’Malley compared the President’s proposal to cut spending for community development programs by $2 billion with September 11, 2001 when “terrorists attacked our metropolitan cores, two of America's great cities. They did that because they knew that was where they could do the most damage and weaken us the most. Years later, we are given a budget proposal by our commander in chief, the president of the United States. And with a budget ax, he is attacking America's cities. He is attacking our metropolitan core."

President Bush has been compared to the terrorists who destroyed the World Trade Center and killed 3000 people because he DARES to propose cutting back on the $32 BILLION budget for Housing and Urban Development . How does this affect you locally? The Community Development Block Grants may be the reason why your community has a Wal-Mart superstore or a Home Depot or a generous amount of subsidized housing that has driven out local stores and real estate investors.

Small local businesses cannot compete in either the housing market or, say, the hardware market, and clothing market, when their competition is getting millions of dollars in grants from the Federal Government in the guise of “redevelopment.”

For those of you too young to remember and those old and forgetful, the Department of Housing and Urban Development was created in 1965 as part of Lyndon Johnson’s “War on Poverty” with a four year funding authorization of $8 billion – i.e. $2 billion a year that included all funds needed for FHA mortgages. It has expanded considerably since then, of course, but its socialistic base remains.

For example, in recent news in the town of Crisfield, Somerset County, Maryland, which has about 2756 people, Walmart is planning to construct a distribution center which could receive up to $1.3 million in federal aid following approval of a Community Development Block Grant application by Somerset County Commissioners. Somerset County Maryland has about 25,000 people in it.

These programs, the biggest of which is HUD's Community Development Block Grants, got about $5.7 billion for 2005. Under Bush's plan, they would be folded into the new "Strengthening America's Communities Grant Program" and funded at $3.7 billion.

Any opposition to the expansion of socialist programs in America of course will bring about unrest among the socialists. So, what the Baltimore, Maryland Democrat mayor is saying, in effect, that a possible reduction or elimination of what Walmart or Home Depot or other large box stores can expect in tax money to enlarge their small-business-gobbling enterprises is comparable to terrorists killing thousands of people a few years ago and destroying two large commercial buildings. This is typical of the exaggeration and downright lies that we can expect from obvious sources in the near future.

Now, before Walmart or Home Depot lawyers contact me, I have nothing against them – provided they use their own money to build with, like the rest of us do. It should not be hard to understand why they can undercut local privately owned stores when they can get millions of dollars in tax money and buy in large volume from places like China to beat everyone else’s prices. I just don’t think that has anything whatsoever to do with free enterprise, which was once considered a very important part of American’s highly successful system.

I’ve had an opportunity to learn more about this latest socialist effort to undermine free enterprise by watching a development involving a HUD community development program in my own town of Provo, Utah, which has about 100,000 population. About half of the residents of Provo are college students and it is the largest town in Utah County. It is also considered the most conservative town in conservative Utah. However, in the past few years there has been a busy little campaign going on, mostly totally unknown to voters in the area, to drive investors out of the downtown area of the city by using the block grants to buy up houses.

First, it appears, the plan is to use the city code selectively against rental property only to force owners to sell their older homes at a bargain or spend thousands of dollars to upgrade their 50-100 year old houses up to modern new building requirements. Generally speaking, the code is not enforced if the house is occupied by an owner. Only if the owner rents part of the house to students or ALL of the house to others is the building inspector sure to arrive.

I watched this technique while I was a building contractor restoring landmark houses and doing routine rehabilitation on old houses in Rochester, New York in the 1960s when entire sections of the city were being demolished and federally funded housing built in its stead. The result of all that was that companies employing hundreds, then thousands, of workers moved out of the city, the city stopped growing, housing and schools were built that were not needed and often remained empty as housing values plummeted and people moved to the suburbs in droves.

I have tremendously enjoyed living in Provo for the past 5 years and would really hate to see its remarkably peaceful and friendly culture be overwhelmed by what happens to towns when large sums of federal money come into the area. Federal money spent totally outside the boundaries of free enterprise creates socialized housing, not owner-occupied housing, and the jobs are generally temporary and low paying. When the government pays for the construction – and this is especially true of homes – very often the mortgage balance ends up being 103% to 110% of the actual value of the home. The new “owner” generally doesn’t realize that – until for some reason he or she needs to sell the house.

When the house doesn’t sell for the amount of the mortgage, the owner simply walks away, of course with ruined credit, and the cycle begins again with tax funds. HUD forecloses on the house, resells it at a loss to the taxpayers, and the cycle starts again.

George W. Bush is trying to return to the free enterprise system – in Social Security and in housing. And, it seems few people realize it – not even the conservatives.

To comment: Mary@bannerofliberty.com