I read the recent article "Sen. Mike Lee forced to sell million-dollar Alpine home" (May 21) and became quite literally sick to my stomach. The citizens of Utah elected Sen. Mike Lee to represent them in the U.S. Senate. He bills himself as a fiscal conservative. He advocates for financial responsibility, a balanced budget, lower government spending and a reduction of national debt.
Then, I waited and watched as both the Deseret News and Salt Lake Tribune gave the senator a pass instead of holding him accountable for his lack of leadership. Nothing but radio silence from the watchdog media. This is particularly disappointing, given the Deseret News' editorial emphasis on financial responsibility.
Lee was not "forced" to do anything. A short sale is a choice, even though Lee says, "It's not something any of us would have chosen." Before he was elected, the senator made an earlier choice to purchase a $1.1 million home, and he promised the bank he would pay off his mortgage with interest. The fact that his home depreciated has nothing to do with making the mortgage payments.
In the short sale, the bank agreed to take a loss of up to $400,000 on the senator's home. Certainly, there's always risk involved in a purchase, but the foundation of integrity is that we own our choices and are accountable for the consequences. But in this case, the bank is taking the loss and Lee is walking away.
There are millions of Americans who have negative equity in their homes. If they all did what Lee has done, the entire nation would fall into a catastrophic depression. Instead, most Americans are sacrificing and scrimping to pay their mortgages and keep their promises. The unintended consequences of the economic downturn did not relieve them of their responsibilities.
Let's do the math: A 30 year mortgage at 5 percent for $1.1 million results in a monthly payment (principal and interest) of $5,905. On a U.S. Senator's salary of $174,500 (benefits not included), one can make the mortgage payment. It may be painful, it may necessitate a change in lifestyle, but it can be done. In fact, if you deduct the monthly mortgage payments from Lee's annual salary, there is still $103,640 a year to get by on. According to the U.S. Census Bureau, the median household income for the State of Utah is $56,330.
Lee says, "You do what you have to do when income doesn't match your outlays." Perhaps he should have thought about that before running for office. He knew his payments then, and he knew what his income would be if he were elected. It appears that he bet on the chance he could sell the home. To use one of Lee's own statements, "Unmoored speculation must not be allowed to overtake rational economic analysis."
Lee was elected in 2010, in the trough of a domestic housing crisis and collapsed pricing. Did a single home in Utah actually appreciate that year? On what rational basis did the senator believe he would not take a loss on the home? And even if his law firm owed him $100,000, that would not solve the problem.
A great leader combines judgment, skill, integrity and responsibility. The correct response is to act with integrity, take responsibility — pare down expenses, adjust, and live within your means. I have friends who have lost their jobs and live with little to no income and could not imagine an income of $174,500. Lee has repeatedly denounced the U.S. government for not living within its means. Now, the senator is the recipient of his own personal bailout. He has torpedoed his ability to speak with credibility on issues of financial and fiscal responsibility.
We need leaders with integrity, who keep their promises, who lead by example, who have the discipline to do what they say they will do, and what they espouse the rest of us do. Yes, there was a short sale. Utah was sold short.
Tai W. Riser has been a financial adviser for 16 years and is a resident of Orem.