Sorry for the repetition, but everyone should know that the Congressional Budget Office (CBO) projects that the new housing bill will only allow 260,000 homeowners to keep their home, not the 400,000 figure repeatedly cited in the media. CBO projects that 400,000 homeowners will enter the program, but 140,000 will face a second foreclosure. The media should be noting that more than one-third of the families who enter the program are expected to eventually lose their home. This reveals a great deal about the effectiveness of the program's design. When discussing CBO's assessment of the cost of the Freddie/Fannie bailout, it is worth noting CBO's dismal track record in anticipating the housing crash. It has been hugely overly optimistic at every step along the way. It was similarly over-optimistic during the stock bubble. Its expectation that the bubble would persist indefinitely caused it to over-estimate capital gains tax revenue by almost $600 billion over the decade from 2001-2010.
--Dean Baker
