Why $75 billion to help home borrowers is a bargain.

Six months into the financial crisis, we now have the outlines of a plan to keep some, though not most, struggling home borrowers in their homes. The plan officially introduced today is modest at best—$75 billion in government spending to help at-risk homeowners is practically small potatoes now that we've gotten used to the thrilling trill of saying "trillions of dollars." But it's being greeted by the Modern Hooverists as an assault on the frugal and responsible. Two weeks ago, CNBC's Rick Santelli challenged the Obama administration to hold an online referendum "to see if we really want to subsidize the losers' mortgages." According the Treasury department, this may include as many as 9 million American families. To the Santellis of the world, these folks are the lucky duckies, remaining comfortably in their homes thanks to legislative fiat and government largesse, instead of heading out into the street where they belong.

The problem with this line of reasoning is not the absence of moral clarity—well, it is that, too—but an equal lack of economic clarity. The subsidies and interest rate cuts on the table now are a pretty good deal for the debtors desperate to stay in their homes. They are, however, an even better deal for their lenders and their neighbors. You might not like the idea of paying to subsidize your neighbor's mortgage, but you'll like the alternatives even less.

Under the rescue plan, banks would cut the interest rates for people who can't afford their mortgages enough to bring their payments down to somewhere from 31 percent to 38 percent of their income for the next five years. Most of the cuts would come out of the banks' pockets, with the government chipping in up to $75 billion in matching funds. Or, to put it another way that's probably a lot easier to keep in your head, a family that earned $50,000 a year after taxes would get enough of a rate cut to get their mortgage down to between $1,300 and $1,600 a month.

You can go online to any of a number of mortgage calculators and examine the numbers yourself to see how this plays out. I tried running the numbers on a fairly simple example. I assumed our hypothetical family bought their house three years ago and still owed $300,000 on the mortgage. At an interest rate of 6.5 percent, they'd have payments of $1,967 a month. Taking the rate down to 3.5 percent would save them about $534 a month and leave them paying 34 percent of their income for housing instead of 47 percent.

If you are susceptible to mortgage-rate envy (if you've ever shopped for a mortgage, you know what I mean), this might sound like a nice little windfall to you. Who couldn't use that extra $500 a month? If you had it, you might move into a nicer house, too. But look what happens when those five years of reduced mortgages are over.

Now it's 2014, and the folks we bailed out still owe about $263,000 on their house. Their low interest rate is about to jump. If they live in one of the areas of the country where prices have plummeted—and most of the people who need the bailout do—they will still owe more on the house than it's worth. They are still underwater. The house that they bought for somewhere in the low $300,000s at the height of the market is not worth $263,000 today, and it will not be worth that five years from now.