Senate Republicans want to include in the economic stimulus bill a provision that would allow the federal government to offer 4 percent to 4.5 percent home loans as a way to reduce foreclosures while at the same time goosing the U.S. economy by freeing up more money for consumer spending. This idea, like most policy decisions that come out of Congress, sounds good until agencies are asked to implement it.
The systems (both digital and managerial) that federal managers must create to comply with new policies are, at best, underestimated by Congress, or, at worst (and most commonly), never considered. The systems can be difficult to create and, many times, are very expensive and given unrealistic time frames -- which the stimulus package most certainly will be following. Many times, software programs have to be rewritten, added onto, or sometimes created from scratch. Sometimes whole networks must be built.
This was the case when Congress passed the 2001 U.S. Patriot Act, which required a system to track the arrival and departure of foreign visitors into and out of the United States. Shortcuts had to be followed to try to comply with the law. It almost happened under the Clinton administration when Congress was considering privatizing part of the Social Security program. In an article I wrote for Federal Computer Week then, information technology managers estimated it could cost as much as $1 billion to build databases and a system to track the portion of Social Security funds that Americans wanted to invest, as laid out by one of the more popular proposals at the time. (Unfortunately, no link to the article could be found on fcw.com's site.)
My guess is that something big would have to be done at the Treasury Department to track the federally backed mortgage investments. How involved it would be is hard to say without talking to IT managers there. The Internal Revenue Service knows how much reprogramming work is required when the tax code is changed. And it's not an insignificant task. It's likely few on the Hill, if any, have considered just how much work would be involved in complying with this latest proposal. And this isn't the only one. Calls for more accountability on how the money will be spent will surely require systems to be put in place. It most likely will be more work than anyone expected -- except maybe the IT staff, who typically make the Hill's policy a reality.
COMMENTS
While I greatly appreciate the sentiment of enormously high, hidden IT costs (particularly when Congress has many people who probably don't even know how to type, let alone what it means to create new software) I'm not so sure this is the best example. After all, tracking mortgages is not new, banks have been doing it for years. There is likely off-the-shelf software that can be purchased by Treasury and used with only minor modifications, if any. Government IT offices sometimes spend too much brainpower on reinventing the wheel.
Colleen 02/06/09 10:41 am ET
Only thing that makes sense in the whole package.
Republicans want to see rates for 30-year fixed-rate home loans cut to about 4 percent for borrowers with decent credit. The national average for a 30-year fixed-rate mortgage is 5.38 percent, according to Bankrate.com. The move could save millions of homeowners a lot of money if they refinanced.
It could also help prop up the housing market. And advocates say it wouldn't cost the government much of anything.
Ed Vaughan 02/06/09 09:58 am ET