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posted: 3/26/2013 5:00 AM

Which debt domino will fall next?

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Finally Fannie Mae and Freddie Mac generate earnings in 2012 after losing $180 billion the preceding three years at taxpayer expense. Is their recent performance sustainable with a perpetually weak jobs market? Let's hope so since they, along with the FHA, bought or insured 90 percent of home mortgages originated in 2012. Six years ago the government's share was just 30 percent.

The government has virtually nationalized financing of housing as well as student loans with almost $1 trillion in un-collateralized student debt. The risk to taxpayers is unprecedented. Taxpayers' exposure also increased with expanded oversight of the banking industry precipitated by the unintended consequences of Dodd-Frank financial reform. The latest new entitlement, ObamaCare, is projected by the Congressional Budget Office to further burden taxpayers.

When you take those four factors with which Congress burdened taxpayers, and add the government's Pension Benefit Guaranty Corporation along with Social Security, Medicare and Medicaid, concern mounts. The question of "who will pay the bill?" has been raised by the deputy editor of The Wall Street Journal, George Melloan, in a recent op-ed piece.

While rhetoric has been growing in Congress about reforming entitlement programs, Congress, once again is ignoring the risk they are placing on taxpayers to support a housing recovery.

Even though the private sector has deleveraged over the past five years, under the auspices of the Big Government strategy embraced by the current administration we have merely shifted and compounded the debt burden on taxpayers.

The question now is which debt domino will fall first? Will it be student loans followed by another housing debacle or banking crisis? Hopefully, taxpayers will wake up early enough to hold Congress accountable by downsizing government. If not, be prepared for the domino effect of a highly leveraged government whose only recourse will be you, the taxpayer.

Mike Tennis

Sleepy Hollow

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