Remember when, just before Christmas, it was announced that the current payroll tax cut was going to be extended for two months?
During all of the congratulatory remarks and back-patting, you know what the architects of the two-month tax cut failed to mention? They failed to mention the fact that they were going to pay for the whole thing with "hidden" mortgage fees.
That's right, D.C. is financing the two-month tax cut with what has turned into a brand new fee on home buyers.
How is that supposed to work?
"The new fee is a minimum of one-tenth of 1 percent on Fannie Mae- and Freddie Mac-backed loans, and is likely to go much higher," CBS reports. "It will be imposed for the next 10 years on most mortgages and refinancings and it lasts for the life of the loan."
Watch the CBS news update:
To cover the two-month extension's $33 billion price tag, the measure increases the fee that the government-backed mortgage giants, Fannie Mae and Freddie Mac, charge to insure home mortgages. That fee, which Senate aides said currently averages around 0.3 percentage point, would rise by 0.1 percentage point under the bill.
"Guess what? The fees collected won’t even cover the loss to the Social Security fund," writes Ed Morrissey of Hot Air. "It’s going into the general fund instead."
He's right. According to CBS, the $35.7 billion collected in fees won't go into the Social Security fund to replace the lost payroll tax. It goes to the general treasury where Congress can spend it "however they please."
And while the House blamed the Senate and the Senate blamed the House when they were asked about the "hidden" fee, one Obama administration official defended the mortgage fee, calling it "modest," according to the CBS report.
The White House said it's "unlikely to negatively affect borrowers" because increases "will be phased in over the next two years." Moreover, it will "help bring private capital back into the mortgage market, which [is] good for borrowers over the long term."
But does that really work?
"Remember this, and remember it well — fees placed on businesses get paid by consumers," Morrissey writes, "Taxes on businesses get paid by consumers. Businesses pass costs along to consumers, and when they don’t, they don’t remain in business for very long. As Robert Heinlein once wrote, 'There ain’t no such thing as a free lunch.'"
The Associated Press contributed to this report.