With the continuing bailout of Fannie Mae and Freddie Mac, along with the impending bailout of the Federal Housing Administration, it is easy to think that the federal government has a near monopoly on misguided and harmful housing policies. Sadly local governments manage, on regular basis, to give the federal government some real competition in terms of just plain dumb.

The last entry is this category comes from Winona, Minnesota. The great folks at the Institute for Justice summarize Winona’s recent actions pretty well:

“In Winona, only 30 percent of homes on a given block may receive a government-issued license entitling the owner to rent them out. As soon as 30 percent of the properties on a block obtain rental licenses, no other property on that block may receive a rental license.”

There are just so many reasons why this policy is harmful. First, if you happen to care about the poor and needy, this policy directly reduces the stock of available rental housing. It benefits existing landlords at the expense of renters and potential landlords, a policy that is likely to be very regressive.

Second the policy reduces the value of homes that don’t get the license. By reducing what you can do with a property, you reduce its value. You also end up leaving foreclosures vacant that could otherwise be rented out. That may also depress the value of near-by homes. Not to mention you may increase foreclosures, because absent owners, such as IJ’s client Ethan Dean who owns a home in Winona and is currently serving in Afghanistan, may not be able to cover the mortgage without renting out the property.

The good news is that the Institute for Justice is litigating to have this misguided policy overturned. Best of luck to them.

Today POLITICO Arena asks:

Will congressional dysfunction boost President Obama’s campaign against a do-nothing Congress, or will it push voters to wipe the slate clean and push for GOP leadership?

My response:

Congressional dysfunction will boost Obama’s reelection chances only if Republicans fail to frame the issue accurately. There’s no do-nothing Congress, only a do-nothing Senate. After the 2010 mid-term elections the new Republican House passed numerous measures aimed at addressing our deficits and debt — none terribly far-reaching, unfortunately — but they’ve all died in Harry Reid’s do-nothing Democratic Senate, which has shown itself incapable of cutting anything.

That means, understandably, that we’re in a holding pattern until next year. As we’re seeing with the extension of the payroll tax holiday, House Republicans are no longer willing to pass responsible rollbacks of government — however parsimonious — only to be demagoged by the president and his party. That game is over. The only questions, as we roll toward November, are whether Republicans can frame the issue for what it is — don’t hold your breath — and whether enough voters will see through the other side’s demagoguery to elect a president and a Congress that will begin to seriously address the out-of-control government we have today. That was done in many of the states in our last elections. It can be done at the national level too, but only with the right messages.

Jonathan Gruber, one of ObamaCare’s biggest defenders, estimates that even after accounting for the law’s tax credits and subsidies, nearly 60 percent of consumers in Wisconsin’s individual market (for example) will pay an average of 31 percent more for health insurance. Some will pay more than twice as much as they did pre-ObamaCare.

Inexplicably, the Kaiser Family Foundation, another defender of the law, counts everyone in the individual market—including those who would pay more—in its estimate of “the number of people who would benefit from the financial subsidies.”

The president’s fiscal 2013 budget includes a 213 page document that contains 210 proposed cuts, consolidations, and other savings. That sounds like a lot until one finds out that the alleged savings would only amount to $24 billion in a $3.8 trillion budget. Not only would the cuts do little to reduce the size of government, they would do nothing to reign in the scope of government.

The following are a few examples of what I’m talking about:

• The administration proposes to eliminate the Environmental Protection Agency’s Clean Automotive Technology program for savings of $16 million. However, the proposed cut doesn’t reflect a sudden desire to end federal “green” subsidies to car manufacturers. Instead, the administration says “other Federal programs are better positioned to research, develop, demonstrate, and deploy a broad suite of advanced vehicle technologies.”

• The administration proposes to cut funding for the Department of Health and Human Service’s Community Services Block Grant program from $679 million to $350 million. The administration cites reports from the HHS inspector general and the Government Accountability Office that “have documented failures in program oversight and accountability.” However, instead of proposing to completely terminate it, the administration says it’s going to fix the program and basically apologizes for having to cut it to meet discretionary spending caps.

• The administration proposes to cut funding by $226 million for fossil fuel subsidies administered by the Department of Energy. These subsidies should be eliminated. But they should be eliminated along with all energy subsidies because the federal government should stop trying to pick winners and losers in the energy market. Unfortunately, it appears that the administration is really only interested in scoring political points with the “green” crowd.

• The administration proposes to save a whopping $3 million by terminating the U.S. Department of Agriculture’s public broadcasting grant program. The administration correctly points out that the program is duplicative of the Corporation for Public Broadcasting. However, the CPB would get another $1 million in funding for an overall budget of $445 million. In other words, the proposed cut would have practically no effect on the federal government’s subsidization of PBS and NPR.

I could go on and on with examples but there’s no point. A glass-half-full type might say, “Well, at least the administration is proposing to cut something.” Unfortunately, the glass is nowhere close to being half full – it’s empty. The administration’s relatively paltry savings would still leave the budget with a projected deficit of $901 billion for fiscal 2013. And the deficit would only be smaller than last year because the government is projected to take in more revenue – not because the government would spend less. Worse, the federal government under this budget would continue to be an intrusive, metastasizing cancer on individual liberty and the economy.

The Washington Post did a great job last week comparing spending earmarks by members of Congress with the locations of property they own in their states. Some members are apparently using our tax dollars to expand infrastructure near their homes and businesses, thus gaining a personal benefit from federal spending.

Washington Post reporters usually do great research on the spending behaviors of politicians, but they often don’t ask the big-picture questions. The Post has uncovered waste and corruption in earmarking, housing programs, and other federal activities, but the paper usually only suggests superficial reforms such as better ethics rules.

When you read the Post story on earmarks, the obvious problem with all the projects identified is that they are properly state, local, and private activities. The story summarized questionable earmarks for 30 members of Congress, and the spending activities included repaving roads, expanding highways, building parking lots, replenishing beaches, dredging harbors, improving traffic signals, and building light rail projects.

States, cities, and private businesses can and should finance these sorts of activities by themselves. There is no economic or technical reason why the federal government needs to be involved. Indeed, there are many disadvantages of federal involvement—including the pork barrel politics that the Post does a great job researching.

Today in the Post, I see the same problem with Walter Pincus’s interesting article on port dredging, which is carried out by the Corps of Engineers. Members of Congress have been battling to secure Corps’ projects in their districts for 150 years, and it’s always been a wasteful process. (Watch for my forthcoming essay on DG).

Pincus hints that port dredging is a subsidy to the “multibillion-dollar import-export business,” and he is right. But he doesn’t then proceed to address the obvious big-picture question: Can businesses support these activities by themselves without subsidies?

The answer is yes. Seaports and seaport dredging can be privatized. Hong Kong has the world’s best seaport according to the World Economic Forum (p. 391), and it is privately financed and operated. By contrast, U.S. seaports—which are generally government-owned—ranked just 23rd in the world, according to the WEF.

So let me suggest that when reporters are investigating problems with federal programs they ask a few big-picture questions. Is the program really needed? Can state governments or the private sector do it? What can we learn from reforms in other countries? After all, the federal government is running ongoing trillion-dollar deficits. To solve its giant fiscal problems, it will need much more than ethics and earmark reforms.

For background, see essays on privatization, fiscal federalism, and transportation.

Politico Pro has published a short but remarkable article [$] stemming from an interview with HHS secretary Kathleen Sebelius. It offers a couple of illuminating items, and one very glaring one.

First, Sebelius undermines the White House’s claim that “28 States and the District of Columbia are on their way toward establishing their own Affordable Insurance Exchange” when she says:

We don’t know if we’re going to be running an exchange for 15 states, or 30 states…

So it turns out that maybe as few as 20 states are on their way toward establishing this “essential component of the law.” Or maybe fewer.

Second, the article reports the Obama administration has reversed itself on whether it has enough money to create federal Exchanges in states that decline to create them. The administration has repeatedly claimed that the $1 billion ObamaCare appropriates would cover the federal government’s costs of implementing the law. And yet the president’s new budget proposal requests “another $1 billion” to cover what Sebelius calls “the one-time cost to build the infrastructure, the enrollment piece of [the federal exchange], the IT system that’s needed.”

In other words, as I blogged yesterday, the Obama administration does not have the money it needs to create federal Exchanges. Therefore, if states don’t create them, ObamaCare grinds to a halt. (Oh, and this billion dollars is the last billion the administration will request. Honest.)

Most important, however, is this:

Even if Congress does not grant the president’s request for more health reform funding, Sebelius said her department will find a solution. “We are going to get it done, yes,” she said.

An HHS staffer prevented the reporter from asking Sebelius what she had in mind.

This is a remarkable statement. Sebelius basically just copped to a double-subversion of the Constitution: Congress appropriates money for X, but not Y. Sebelius says, “I know better than Congress. I’m going to take money away from X to fund Y.” Sebelius has already shown contempt for the First Amendment, first by threatening insurance carriers with bankruptcy for engaging in non-fraudulent speech, and again by crafting a contraceptives mandate that violates religious freedom. Now, she has decided the whole separation of powers thing is for little people. What will Sebelius do the next time something gets in the way of her implementing ObamaCare?

I don’t see why a federal official should remain in office after showing so much contempt for the Constitution she swore to uphold.

My latest:

On Friday, President Obama tried to quell the uproar over his ongoing effort to force Catholics (and everyone else) to pay for contraceptives, sterilization, and pharmaceutical abortions. Unfortunately, the non-compromise he floated does not reduce by one penny the amount of money he would force Catholics to spend on those items. Worse, this mandate is just one manifestation of how the president’s health care law will grind up the freedom of every American.