Not So Fast On Mortgage Interest Deduction

The wonkosphere seems to be mostly united in thinking that the mortgage interest deduction is a bad idea. Not so fast.

Yes, this is a form of middle-class welfare that hinges on the intellectually troubled notion that home ownership is a net benefit to everyone, makes for higher aggregate property values and therefore a benefit to all, when it’s clear by now that there are a lot of social consequences including sprawl, isolation, the very neighborhood blight it was supposed to fix, and so on.

But it’s not that simple. Families don’t think like economists or budget wonks. Conversely, any time you hear the government being urged to think like families, run. Families think mostly in terms of what their monthly mortgage payment will be first. Knowing that you get to deduct a big part of your biggest expense every month means you can usually pay a little bit more for a house than you could for a rental. That means you can buy more house. That means there is more demand and prices stay higher…

…and that means that there is more property tax revenue for states and local governments. Anyone who hasn’t been trapped in ice for the last 5 years knows these are the very entities that are in the most danger from The Great Recession. They also directly provide many of the services that people who vote use on a day to day basis. Schools. Fire. Police. Roads. And I don’t think replacing the revenue this will cost them with block grants is going to make anyone feel better. Block grants can be taken away.

So, either show me that this won’t be a problem or tell me how you’re going to replace the revenue. Or else stop it with this talk—which is, as all of the same wonks recognize, politically futile anyway. But it’s also even lacks the justification of being smart policy if it’s going to gank local government.

One thought on “Not So Fast On Mortgage Interest Deduction”

  1. I fail to see where any of this is relevant at this time

    Math is reality:

    The CBO and IMF announced three weeks ago that the US Government debt is 200 Trillion
    Add to that 102 in unfunded liability for SS & Medicare
    11 Trillion for unfunded mortgages; 67 trillion plundered from other Federal Trusts (see Hodges Report)
    Plus interest on all of the above – AND 1.5 Quadrillion in phony counterfeit derivatives printed by these banks!
    14 Trillion borrowed to “bail out bankers” = 60 Trillion in interest payments. Today in news the IMF announces they are going to give these bankers another 4 trillion free plus interest of 11 Trillion!

    Toyota & Honda make 23 Billion year; GM & Ford lose 45 Billion a year.
    USA makes no TV’s, etc.
    Saudi Arabia holds 235 billion in Treasuries – If they sell them off the USA will collapse.
    Without real money to pay for oil, how will America run; farmers & shippers operate?
    US Federal Debt is 1200% of GDP (200 Trillion) – 6 Times greater than Japans GDP to debt ratio

    China is now the number one energy producer in the World!

    Russia may be more interested in her dominance of the world’s fossil fuel supplies, which leaves China in the driving seat for gold, while Russia imitates the three wise monkeys. This combination of energy and gold strategies is particularly unfortunate for the West.

    US has current account deficits in 90 countries. When the dollar goes bust, people will use other cheap markets like Vietnam, Indonesia, etc., for products & services rather than the USA.

    America may be wealthy – however, they are 2nd only to Mexico in poverty and illiteracy among industrialized nations

    Moreover, they have more incarcerated than any society in history!

    Seems all that ill-gotten non-earned wealth created a poor environment! Not a very healthy place for all the boys and girls!

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