Free Money Isn't Free

Why is it that people seem to think that any money which comes from the Government is free? In this debate we are having about the CPA for example, we keep hearing about we get this from the state, we get that from the state, has anyone ever stopped to think where this money actually comes from?

Let's take the "matching" funds from the CPA for example. These funds come through fees charged by the state  to anyone who buys a home, refinances a home, takes out a second mortgage or a home equity loan. Read this post, about 3/4 of the way down for more details on where they come from. This means that you and everyone else in the state who has any kind of real estate transaction pays for it. Is this free money?

What happens when, as is the case now, that the real estate market has tanked? There are less transactions, therefore less fees collected. Less fees collected means less money in the free money pot. Who makes up the difference? One solution, which has already happened is to lover the percentage of funds matched. That 100% matching funds we hear about is now less than that. It is now down to about 43 cents on the dollar. I am not a banker or an accountant (look at my checkbook for proof of that) but I am pretty sure this means we are now going to have to take longer to pay these CPA funds back.

The second solution is to raise the fees even more, something which has already happened. Again, who pays these raised fees? Anyone who has any kind of real estate transaction. For all of you Romney supporters, remember when he claimed to lower taxes when he was governor? He did, but where did he make this money up? From raising fees on everything else and implementing new ones.

And what happens when the state decides they need to money for something else? Those matching funds go away. Don't think for a minute this wouldn't happen, it will. When it comes down to what is needed more, some overpaid politician running a state agency or the CPA, guess who will have the most pull?

There is no free money. You pay for it. If not through your local real estate taxes then through another method. It is simple economics. Money has to be made before it can be spent. The state does not "make" money, they take it, you make it. It really is that simple.