Posted on 02/14/2011 2:49:47 PM PST by fightinJAG
Earlier today, the White House released a budget proposal that included trimming the mortgage interest deduction for taxpayers in the top income tax brackets.
This is the first step in eliminating what many economists view as an expensive and inefficient housing subsidy.
Unfortunately, many of the critics of the mortgage interest deduction focus on its immediate costs. If it were eliminated, it might bring in more than $2 trillion of new revenue for the government oras I proposed this morningallow up to $2 trillion of new tax cuts for the American people.
Actually, I think getting rid of the housing subsidy could be an even better deal than thatproviding it is done by expanding the deduction into a general tax cut instead of closing the loophole and raising taxes.
(Excerpt) Read more at cnbc.com ...
No, if you look back at the depressions and panics of the 1800's, you'll see that they were often associated with real estate. And that was long before Freddie and Fanny. How many of those were really real estate bubbles that affected the economy vs how many was a economic downturn affecting the real estate market is anybody's guess. But I think for the most part, the real estate market responds to changes in the economy, and not vice versa.
Real estate can be subject to speculation just like tulips were. And clearly that has occurred in California and parts of Florida. When you have people buying houses just to flip them under the greater fool theory, that's clearly speculation. But that can happen whether you have an interest rate subsidy or not. A subsidy doesn't cause speculation. Speculations are caused by market psychology.
In most of the market, people don't demand more than the one house they intend to live in. The interest tax break may help them afford a nicer house, but I would submit most of the increase in price is because the houses are nicer not because a government subsidy is creating excess demand. The interest rate break makes the entry into home ownership more affordable, it shifts the substitution between rental and ownership towards ownership, and it may increase total demand a little, but it doesn't cause speculation.
I think there is.
Well - those are some good ideas, but they aren’t going to happen.
The US has been systematically deindustrialized on purpose. Oh, we still manufacture many things, large ticket items mostly, but electronics aren’t coming back.
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