The day before the federal government took over mortgage giants Freddie Mac and Fannie Mae, Alaska Gov. Sarah Palin railed against the mortgage giants’ drain on taxpayer money at a rally in Colorado Springs on Saturday. Only problem: the private corporations haven’t been costing taxpayers a dime and only might under a bailout program supported by Palin’s running mate, Sen. John McCain.
Critics circled Palin’s remark that Freddie and Fannie had “gotten too big and too expensive to the taxpayers” — which drew cheers from a supportive crowd — as an example of the vice presidential candidate’s failure to grasp key fundamentals as she launches onto the national stage:
Economists and analysts pounced on the misstatement, which came before the government had spent funds bailing the two entities out, saying it demonstrated a lack of understanding about one of the key economic issues likely to face the next administration.
“You would like to think that someone who is going to be vice president and conceivably president would know what Fannie and Freddie do,” said Dean Baker, co-director of the Center for Economic and Policy Research. “These are huge institutions and they are absolutely central to our country’s mortgage debt. To not have a clue what they do doesn’t speak well for her, I’d say.”
The Huffington Post’s Sam Stein rounds up a bevy of criticism from across the spectrum:
Even conservative analysts acknowledged that the statement simply did not hold true.
“Heretofore, if the treasury had a balance sheet there would have been a liability but there was never a taxpayer payment before [the bailout],” said Gerald P. O’Driscoll, an economist with the Cato Institute. “[Fannie and Freddie] were not taxpayer funded. They had taxpayer guarantee, which is worth something, especially in the stock market…”
TPM’s Josh Marshall sets Palin’s statement in context:
I understand that the TV networks and the big papers feel like they’re not allowed to criticize Gov. Palin. But we’re in the middle of a housing and credit crisis and she doesn’t even know what Fannie and Freddie are. It’s an embarrassing level of ignorance that would sink a candidate for house or senate.