NEW YORK - A government-backed mortgage bailout is needed, and it must be done right away.

Before shouting about all the reasons why taxpayers shouldn't rescue the profligate who took on more debt than they could handle, think about this: New research estimates suggest one in 33 subprime borrowers will foreclose on their homes in the next two years.

That means the mortgage rot could be on the street where you live. And it could spread to your schools, to your hospitals and to the roads that you drive on.

This is one of those times when doing the right thing isn't necessarily fair, but it needs to be done for the greater good.

Foreclosures aren't someone else's problem. They hit all of us hard. Some 40 million homeowners could see their property values and their municipalities' tax bases drop by $356 billion over the next two years if this situation lingers, according to a recent report from the nonprofit group Pew Charitable Trust.

The rise in foreclosures not only knocks down what your house is worth - by $8,800 on average, according to the Pew report - it also means there will be less money for projects in your communities, too, because of declining tax rolls. At the same time, homes in foreclosure are more apt to be targets of crime and vandalism.

"If your neighbor forecloses on their house and it sits empty, that depresses the property value for everyone around it," said Kil Huh, a project manager at the Pew's Center on the States who worked on the report. "And often houses that foreclose sell for less than what they would have been worth."

Stopping The Cycle

Clearly something is needed to stop the cycle: Lower home prices lead to higher foreclosures, which then depress prices even more. Many of those walking away from their debts are borrowers whose houses are worth less than their mortgages so they see no incentive to keep paying what they owe.

Federal Reserve Chairman Ben Bernanke focused on this issue during a speech Monday night when he urged Congress to take additional steps to alleviate the problems. He noted some 1.5 million U.S. homes entered into the foreclosure process last year, up 53 percent from 2006, and the rate of new foreclosures looks likely to be even higher this year.

"High rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets and the broader economy," Bernanke said. "Therefore, doing what we can to avoid preventable foreclosures is not just in the interest of lenders and borrowers. It's in everybody's interest."

Bernanke and other government officials gave a similar spin in March after the Fed took the extraordinary step of rescuing Bear Stearns from the brink of bankruptcy due to its credit-market exposure.

The Fed was sharply criticized for brokering the deal for JPMorgan Chase & Co. to buy Bear Stearns using $29 billion in special financing that the central bank approved. Government officials said it was done to stabilize the nation's financial system.

That's the same reason mortgage relief is needed now.

Measure Would Aid 500,000

In his comments Monday, Bernanke appeared to throw some support behind a $300 billion housing-aid package pushed by House Financial Services Chairman Barney Frank, a Democrat from Massachusetts.

Frank's measure is estimated to cost $2.7 billion over the next five years and help some 500,000 homeowners. It would relax standards at the Federal Housing Administration so the agency could back more affordable, fixed-rate loans for borrowers currently too financially strapped to qualify.

Those homeowners could refinance into new loans if their lenders agreed to take substantial losses on the original mortgages. Borrowers would have to show they could afford to make payments on the new loans. The House passed the housing aid plan Thursday, but President Bush says he will veto the bill.

During an interview with The Associated Press on Wednesday, Treasury Secretary Henry Paulson called the measure too broad. He said the administration would continue negotiating with Congress for an acceptable bill, but he did not offer any details about what mortgage relief the administration would support.

"Housing is an important area and there are certain things that we need to get done there from Congress," Paulson said. "I view my job as to work to get something that is acceptable and that the president can sign."

But while Washington fiddles, time is slipping by, housing prices are dropping more and the crisis intensifies.