Joining Truth for America for a repeat visit was Kevin Williamson, deputy managing editor of National Review, and a columnist for New Criterion. He also is an adjunct professor at the King’s College in New York City. A frequent commentator on politics and economics, he has appeared on the Glenn Beck Show, the Kudlow Report, the CBS Evening News, the BBC, Power & Politics, CNN’s Parker Spitzer, and dozens of talk radio programs.  His most recent book is “The Politically Incorrect Guide to Socialism.”

The discussion turned to the President’s new mortgage-relief plan that would allow judges to rewrite contracts relating to troubled mortgage-backed securities. This would impact the endangered capital of banks, pension funds and other holders of such securities, including the Federal Reserve, Fannie Mae and Freddie Mac.

Williamson is skeptical that this plan will work. One stumbling block will be that homeowners will have to locate their original mortgage contracts.  This can be problematic since most mortgages are transferred to other financial institutions.

“This should be a banking concern, not a government ruling.  Ultimately, taxpayers will be subsidizing foreclosure settlements.  The ruling is particularly troubling because Fannie Mae and Freddie Mac, which hold nine out of ten mortgages, are exempt from having to come up with the money,” said Williamson. “The guilty are never punished in bad loans.  Contracts don’t mean what they used to. Even bankruptcies aren’t the same,” said Williamson.

Williamson likens today’s regulatory system to those of banana republics. He foresees a public and private financing meltdown, which the Democrats are trying to postpone until after November 2012 elections.

Williamson also predicts that 20-27 states are facing bankruptcy.  Illinois and California are most at risk, due to the cost of employee pension plans.  Illinois could be insolvent before 2012. If such an occurrence becomes a reality, there is no historical precedence for a state becoming insolvent.

“The next biggest disaster will be the cost of public debt financing.  States will be looking for federal bailouts but the money isn’t there.  The U.S. treasury is under fire, and so will the American dollar among foreign countries holding American debt,” said Williamson.

Despite the unrest in Wisconsin, Williamson doesn’t believe that Wisconsin’s economic ills are as bad as other states.  He thinks that Governor Walker is going about his duties the right way.  “It’s not about reducing the strength of the unions, it’s about reducing the size of the public sector,” added Williamson.

Williamson noted that since 98 percent of union money went to finance the Obama election, we should not be surprised by Obama’s policies.  Williamson puts the current national public debt at $135 trillion, with $100 trillion attributed to entitlements.

“The country must work out its economic troubles before it becomes a crisis and the system collapses.  Medicare reform is critical. It will be painful and very hard to convince the public, but the current cost is not sustainable. Medicaid needs to be shut down or it will bankrupt states,” predicted Williamson.