What started off as a juicy rumor by a controversial website is gaining credibility, and may soon balloon into a damning scandal for former President Barack Obama and his signature health insurance program.
More importantly for America’s taxpayers, however, the allegation may serve as the beginning of the end for a highly suspect scheme known as the “Net Worth Sweep.”
Early this month, InfoWars, the political news and opinion website founded by conservative radio personality Alex Jones, claimed the Obama administration illegally diverted profits from Fannie Mae and Freddie Mac to the bankroll portions of Obamacare.
After the Affordable Care Act was signed into law, Obamacare opponents in the House of Representatives shrewdly refused to fund handouts to insurance companies to subsidize health insurance premiums for lower-income individuals. Since the primary purpose of the legislation was to provide subsidized health insurance for struggling Americans, Obamacare was left in a lurch.
The executive branch tried everything from deceptive accounting to shell games to move money from one pot of government funds to the Obamacare till. Ultimately, a federal judge stepped in and ruled that the Department of Health and Human Services could not redirect other federal funds to pay for the subsidies.
Within weeks, however, the subsidies were miraculously funded, against the will of Congress.
Recently revealed documents appear to confirm that the sudden influx of Obamacare funds was money the Obama administration diverted from Fannie andFreddie.
As these additional details emerged, respected financial reporters such as Maria Bartiromo of Fox News and the Fox Business Network began lambasting Obama for his dishonest budgetary tactics.
InfoWars Washington bureau chief, Jerome Corsi believes the action was a deliberate attempt to bankrupt the federally sponsored mortgage facilitators. More likely, Obama was frantically trying to find a way to secretly siphon money in order to save Obamacare.
Whatever the former president’s reasoning, Obamacare apparently illegally devoured billions of dollars from government-sponsored enterprises committed to helping struggling American accomplish their dream of owning a home.
A group of Fannie and Freddie shareholders, who believe their profits were skimmed by Obama and his cronies to fund Obamacare insurance subsidies, are fighting back. They sued the federal government to receive the dividend payments that were pocketed by the federal government.
The shareholders have a right to be mad. Their initial investments were used to rescue Fannie Mae and Freddie Mac as part of the Housing and Economic Recovery Act of 2008 – the housing bailout bill. Fannie and Freddie profits were supposed to repay those shareholders for bailing them out, as well as fund an emergency account to ensure future bailouts wouldn’t be needed.
Since 2013, however, all of the profits generated by Fannie and Freddie have been swept into the Treasury Department’s general funds. Not a dime has been returned to investors or set aside for a rainy day.
This raiding of Fannie and Freddie profits has become known as the “Net Worth Sweep.” The maneuver, which takes place regularly with no Congressional authority, inappropriately diverted $240 billion in dividends from investors to federal programs such as Obamacare, according to Corsi.
The next Net Worth Sweep is scheduled to take place on March 31. But it doesn’t have to.
If President Donald Trump is truly committed to draining the swamp, he should look no further than putting an end to the Net Worth Sweep. There is simply no place in the federal government for a scam that improperly funded Obamacare behind the backs of Members of Congress, while ripping off the investors who bailed out America’s housing market.
Rather than allowing the Net Worth Sweep to continue, President Trump should stop the sweep payments, demand the Justice Department turn over 11,000 Net Worth Sweep-related documents the previous administration refused to make public, and fully investigate how every dime of Net Worth Sweep money has been spent.
Drew Johnson is a Senior Scholar at the Taxpayers Protection Alliance.