LBJ joins Alan Greenspan and Andrew Cuomo

as the authors of the mortgage crisis:

Today's troubles began when President Lyndon Johnson was having a hard time delivering on his guns-and-butter promise. In January 1968, LBJ proposed to Congress both a war surtax and a change in government's bookkeeping. The Federal National Mortgage Association would move off-budget, nominally reducing federal borrowing. The new mortgage company, the New York Times reported, would be ``wholly privately owned.''

But not entirely private. For here is where Fannie's career as a swinger -- swinging between public and private, that is -- took off. Either at that point, or later, Fannie and its sibling, Federal Home Loan Mortgage Corp., or Freddie Mac, enjoyed a number of government privileges.

But the Fannie fiasco matters for a less obvious reason. There are other accidents waiting to happen in the social entitlements whose costs also will jeopardize U.S. long-term growth. Social Security and Fannie aren't often spoken of in the same breath -- as programs go, we associate Social Security with the swinging-and-60-plus crowd, not the Swinging '60s.

What Social Security and Fannie have in common is that both have lived important segments of their lives off-budget. Tax increases are likely to pay for Fannie and Freddie. These increases will remind voters that being off-budget doesn't mean a program won't eventually penalize the taxpayer. Burned by Fannie, voters may get ready for entitlement reform.

That's hardly a consolation. Still, all that suggests the Treasury's acknowledgement of the GSEs' costs was a wise one. The first step to financial stability is getting swingers to stay on the books.

My recent musing on Greenspan and Cuomo here.

UPDATE: Greg Mankiw has a list of top recipients of Frannie gravy:

1. Dodd, Christopher J, D-CT
2. Kerry, John, D-MA
3. Obama, Barack, D-IL
4. Clinton, Hillary, D-NY

I note that, for the presumptive Change Candidate, he runs with some pretty old school characters.