I've got some great news for you.
President Bush has decided to forgive $40 billion in home mortgage debt as a way of stimulating the U.S. economy.
In a bold move, Bush said he was taking the action to relieve Americans of the oppressive tax-and-spend programs that have cost citizens more than they pay annually for food, shelter, clothing and transportation combined.
"Government has been taking and taking and taking from the American people for too long," he said. "It's time for government to give back. It's time for real tax relief."
The $40 billion refund will be distributed to homeowners on a first-come, first-served basis. The first 1 million qualifying homeowners will receive a reduction of $40,000 in mortgage debt.
The administration calculates the reduction of mortgage debt will reduce the average America's monthly payment by $400.
Well, that's not exactly what happened.
Instead, what actually happened was that President Bush agreed last week with the Group of Eight major industrial nations to forgive more than $40 billion in debt by African nations to the World Bank, International Monetary Fund and other international lenders.
But you feel just as good about that, don't you?
After all, like they say, it is better to give than to receive.
And, after all, you knew it was too good to be true that the U.S. government was actually going to do something that benefited you.
You knew this is one of those headlines and news stories that you would never see in your lifetime.
So what if Americans are staggering in record amounts of debt with no relief in sight. We've got obligations to help out our less-fortunate neighbors around the world. The bankers need to be paid, and pay them we will.
There are real needs to be met, not just in Africa but in Asia and the Middle East and elsewhere. We've got dictators to overthrow and democracies to be established and poverty to be eradicated. This is the price to pay for empire.
We've got to bail out Third World countries. We've got to increase our commitment to funding the United Nations. We've got to buy more goodwill around the world with foreign aid.
Actually the $40 billion debt relief authorized by President Bush is merely a drop in the bucket. Americans will scarcely even notice the small reduction in their paychecks each week to cover this mission of mercy.
We live in a global age, and a president, these days, well, he just has to watch out for the best interests of all the people of the world – not just American taxpayers.
In fact, this $40 billion debt forgiveness is just the beginning. The same people who authorized it are suggesting Africa alone needs an extra $25 billion annually from the United States each year through 2015.
Putting aside the constitutional questions of such wealth-transfer programs, do they really accomplish their goals? Do they really do any good?
A new study by the International Policy Network concludes that aid has failed to achieve its goals in the past 50 years. Worse, in many cases aid has been counterproductive – crowding out private-sector investment, undermining freedom and perpetuating poverty.
The author of the report, Swedish economist Fredrik Erixon, points out that aid is based on fundamentally flawed assumptions, which undermine rather than enhance economic development. Erixon warns against increasing aid spending, saying:
If G8 countries commit to increasing spending on aid, the consequences could be devastating for most Africans. Too often, aid has done more harm than good, especially in Africa. It has aggrandized the political elite and disempowered the common man.
Erixon explained the flawed assumptions that underlie the theory of aid:
Countries are not poor because they lack roads, schools or health clinics. They lack these things because they are poor – and they are poor because they lack the institutions of the free society, which create the underlying conditions for economic development. Aid has it upside down.
He continued by contrasting the plight of most African countries with that of Botswana:
Botswana chose to empower its people with inclusive economic institutions instead of pursuing socialism like many of its African counterparts. As a result, it has experienced the world's highest rates of economic growth in the past 30 years, and its people are far better off – with per capita incomes of around $8,000 per year, compared with less than $1,000 in many African countries.
Africa received over $400 billion in aid between 1970 and 2000. Yet, the evidence presented in the study shows an inverse relationship between aid and economic growth – when aid rises, growth falls. In part, this is because aid supplants private-sector investment and undermines savings: there is also an inverse relationship between savings and aid – when aid increases, saving decreases.
So the bottom line is foreign aid is bad for you and it's bad for the recipients. But yet the scam continues.
No, your debt is not forgiven. It keeps on mounting. But don't be depressed. It could be worse. Instead of being the bottomless-pit source of all this global largesse, you could be on the receiving end.