Government must stop direct lending, GOP Rep. Luetkemeyer says

Rep. Blaine Luetkemeyer (R-MO) speaks as Secretary of Health and Human Services Alex Azar testifies before the House Select Subcommittee on the Coronavirus Crisis, on Capitol Hill on October 2, 2020 in Washington, DC.

J. Scott Applewhite | Pool | Getty Images

In the 1970s, an agency within the U.S. Department of Agriculture agency made thousands of direct loans for the purchase of farmland. The easy money and the government’s lack of due diligence led to a massive increase in land values. It ultimately ended in disaster with $13.5 billion in unpaid loans and several farms seized by the agency.

Then, in 1998, the Small Business Administration also learned a hard lesson about government’s inability to responsibly lend money. The agency had to stop issuing direct business loans because the subsidy rate – the cost to taxpayers – was 10 to 15 times higher than the subsidy rate for its loan guarantee programs. 

Not to be deterred by a history of failure or…

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