Beltway Snark

Let’s start by looking at Palin’s supposed gaffe about the Fannie Mae/Freddie Mac situation:

Gov. Sarah Palin made her first potentially major gaffe during her time on the national scene while discussing the developments of the perilous housing market this past weekend.

Speaking before voters in Colorado Springs, the Republican vice presidential nominee claimed that lending giants Fannie Mae and Freddie Mac had “gotten too big and too expensive to the taxpayers.” The companies, McClatchy reported, “aren’t taxpayer funded but operate as private companies. The takeover may result in a taxpayer bailout during reorganization.”

Economists and analysts pounced on the misstatement, 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 conceivable 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.”

It seems to me that Sarah Palin knows more about the workings of Freddie and Fannie than Dean Baker, and McClatchy for that matter. You see, Freddie and Fannie are not really private companies, they’re both hybrid private/government owned companies. They carry out business much like a private company (and cook the books like a private company can), but get their lines of credit directly from the US Treasury as opposed to a private bank. And where does the US Treasury get its money you ask? Well, that would be from our tax dollars. When things go south (like now), it’s the taxpayers who would pay the price for it. I would hope an economist would understand that concept.