The collapse of the housing market left many American homeowners facing foreclosure. President Obama's $75 billion mortgage-relief plan, announced in February, is intended to help up to 9 million U.S. homeowners. Yet, the idea of the U.S. government giving away tax dollars with no strings attached has drawn much criticism.
Public service could be required of homeowners as a condition for receiving federal aid, although they should not be compelled to repay any tax dollars they receive, says University of Illinois law professor Michael LeRoy. By making a positive contribution to society, they'll be stretching taxpayers' dollars even further.
LeRoy outlines his ideas in a recent paper entitled "The Inequality of Sacrifice - Reducing Moral Hazard for Bailed-Out Homeowners: The Case for Compulsory Community Service."
There are numerous historical precedents for mandatory public service dating back to the eighteenth century, LeRoy points out. According to the U.S. Supreme Court, mandatory public-service work is a far cry from "involuntary servitude," as some critics have claimed. As far as the service requirement goes, he tells THE FUTURIST, "I suggest that bailed-out homeowners work for 200 hours on a Habitat for Humanity program - or similar civic-minded projects in their communities."
Although it may seem like it at first glance, this proposal isn't intended to punish the victim. Besides, LeRoy argues, at least part of the blame does in fact lie with those who gambled with the housing market. There are precedents for these requirements. Also, much federal aid (such as welfare) tends to come with strings attached - if it comes at all. LeRoy asks, somewhat rhetorically, "If homeowners get hundreds of dollars per month in mortgage assistance, why don't low-income renters get a government subsidy?"
But just as no-strings-attached debt relief is criticized as unfair, so, too, would be a blanket work requirement. For example, it could be argued that the amount of public service required should be adjusted depending on how much money a homeowner receives from the government. Yet if that were the case, then working families in high-cost areas saddled with so-called "jumbo loans" could contend that the law unfairly punishes them.
Another possible drawback of the public-service model is that it could interfere with work obligations, child care, and job searches.
LeRoy suggests that legislators and policy makers take his suggestion as a starting point and debate these matters earnestly, with the goal of working out the details and finding the best possible arrangement.
- Aaron M. Cohen
Source: University of Illinois at Urbana-Champaign, www.uiuc.edu.
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