Is it fair to force people who have faithfully paid their mortgages to bail out those who haven't?

by Mark Schwartz

Created on: July 24, 2009   Last Updated: July 25, 2009

Is it fair for the U.S. government to help some people and not others? While this may initially seem like an unfair practice, it happens all the time, and most people are fine with it. Unemployment, for example, is paid to people who have lost their jobs. Those who haven't lost their jobs don't get this help. Is it unfair? In the strictest sense of the word, it is. But most of us realize that certain people will need help from time to time, and that it is appropriate and good to help them out, even if this means that others who don't receive help are, through their taxes, bailing out those who need help.

This current mortgage crisis is another example of this same basic principle. Some people are no longer able to pay their mortgages, and they need help in order to retain their homes. The basic question many people are asking is why certain homeowners can no longer afford to pay their mortgages. For some, it may be their own fault they bought more home than they could reasonably afford, and were banking on property values continuing to rise. For others, they may have been the victims of predatory lending lenders who gave them poisonous loans with prepayment penalties, rate adjustments, and other obstacles they didn't fully understand. Still others have been hit by the current financial crisis with job loss (or even job reduction) or other income interruption. With many complicated factors at work, it is difficult to draw any kind of a line to say that the government should only help people retain their homes as long as forces outside their control have caused them to need help. It is fair and right for them to help all these people in need, even though they are not helping everyone equally.

In the current mortgage crisis, even those who have faithfully paid their mortgages will see their property values drop if the houses in their neighborhood are foreclosed on, so everyone stands to lose from foreclosures. People are asked to provide help, through the taxes they pay, that will almost certainly provide an indirect benefit to the very people paying those taxes. While mortgage help is not directly provided to everyone equally, at least some benefits are there for everyone, even if those benefits are indirect.

The government does and should help select groups of people in just about every federally-sponsored program. Even the progressive income tax code taxes higher-earning people a greater percentage of their income than lower-earning people. Is that unfair? Some may say yes, but, as many are finding out, you never know when you may need a little assistance from this unfair system, and if and when that day comes, you may be very glad to have some unfair help.

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