Big Government to the Rescue:
From the Washington Post:
The Bush administration is finalizing details of a plan to rescue thousands of homeowners at risk of foreclosure by helping them refinance into more affordable mortgages backed by public funds, government officials said.
The proposal is aimed at assisting borrowers who owe their banks more than their homes are worth because of plummeting prices, an issue at the heart of the nation's housing crisis. Under the plan, the Federal Housing Administration would encourage lenders to forgive a portion of those loans and issue new, smaller mortgages in exchange for the financial backing of the federal government.
The plan is similar to elements in legislation proposed two weeks ago by Barney Frank (D-Mass.), who chairs the House Financial Services Committee, officials said. . . . If enacted, the plan would mark the first time the White House has committed federal dollars to help the most hard-pressed borrowers, people struggling to repay loans that are huge relative to their incomes and the diminished value of their homes.
Sounds like a plan to me...
1. "Although Fannie Mae and Freddie Mac are no longer government
agencies, their status as government-sponsored enterprises causes
people who buy their repackaged loans to assume an implicit federal
government guarantee. Also, to the extent government views large
lending companies and banks as "too big to fail," it contributes to
moral hazard."
2. "little-noted change in regulations by the comptroller of the currency
in December 2005 that acted as the trigger.
Financial planner Less Antman has pointed out that the comptroller
started requiring banks to require minimum payments on credit card
balances, causing increases of at least 50% for most cards and as
much as 100% on others. Many people who hold subprime mortgages are
people for whom a higher monthly payment on a credit card would be a
problem."
3. "The third federal contributor to the subprime crisis is the Community
Reinvestment Act. This act, first passed in 1977 and beefed up in
1995, requires banks to lend to high-risk areas that they otherwise
would avoid. Those banks that fail to comply pay fines and have more
difficulty getting approval for mergers and branch expansions.
As Stan Liebowitz, a University of Texas economist, has pointed out,
a Fannie Mae Foundation report enthusiastically singled out one
mortgage lender that followed "the most flexible underwriting
criteria permitted." That lender's loans to low-income people had
grown to $600 billion by 2003.
Its name? Countrywide, the largest U.S. mortgage lender and one of
the lenders in the most trouble for its lax lending practices."
If they'd have made money instead of ending up behind the eight ball, would they give the rest of us a cut of their loot? Not hardly.
So let the chips fall. The market will sort it out the same way it did after the '89 real estate crash. Government meddling sets a terrible precedent, e.g. the "temporary" rent control that began during WWII -- which is still screwing up the NYC housing market.
The market didn't "sort itself out" in '89. Remember the $120 billion S&L bailout? So if you like what happened after the '89 real estate crash, you should favor a government bailout.
If the government doesn't bail out the housing market, then the resulting liquidity/solvency crisis the in financial markets will harm the "responsible taxpayers" who didn't take out mortgages they couldn't afford. Most economists agree that the harm to those "responsible taxpayers" if the government did nothing would be greater than the cost of a bailout. So by bailing out the housing market, you're essentially paying $5 to avoid a $7 loss. The moral hazard consequences of the bailout could possibly make the cost to unrelated parties greater than the expected loss, but that's highly debatable. But economists on both sides of the aisle agree that a government bailout is probably the efficient thing to do in these circumstances.
In any event, the knee-jerk "government intervention is always bad!" reaction implicit in the title of this post ("Big Government to the Rescue") betrays a lack of understanding of economics.
aside: I profited... greatly from the NYC real estate slump, early 1990's.
If you work for Bear Stearns, you already got it.
So do I, but how many hundreds of billions of dollars has the Fed pumped into the banking system over the last month or so to shovel money into the pockets of folks who are supposedly financial geniuses and really ought to know better.
JF, the Feds action are more properly termed as loans or equity investments. It is not free money.
Which is exactly what this plan is--have the banks accept a buyout of the loan--which they would otherwise foreclose on and lose anyway, for less than the principal amount, and convert it to an FHA backed loan.
Call it renegotiating. Nobody is getting free money. These people can't afford their current mortgages and their houses are worth less than they owe. It is better to forgive a portion of the loan and get a new one, guaranteed by the government, that more accurately reflects the value of the house.
BTW, our government, unlike sovereign wealth funds, is not getting an equity stake with any of these bank bailouts and loans. I could just imagine the heads exploding on this site if the Fed had just nationalized Bear Stearns instead of brokering what ended up to be a sweet deal.
Ah, but one of the two great lies of our time is that Bush is conservative. (The other is that the media is liberal.)
I guess "socialism" is okay, as long as the beneficiary is big business.
I think it is better for our economy if we help ameliorate the sharpness of this housing downturn. That is the bottom-line. The gov't didn't take 30 billion of risky obligations off the books of Bear Stearns to benefit either the stock holders of Bear Stearns or Chase. They did it to stabilize the economy as a whole. Likewise, that is what this plan is about.
I think it is very interesting that certain conservatives would irresponsibly harm the economy in the name of personal responsibility. In fact, I find it hilarious. Morons.
Win-win-win-win.
This is a particularly noxious bullshit that the banks are trying to sell as a reason why they made all these stupid loans. While they were encouraged to lend in disadvantaged neighborhoods (where for years they had "redlined"), nobody, not the government and not civil rights organizations forced banks to lend money to people with bad or questionable credit, or invent the MBS that made all these crazy loans possible.
actually, if the banks wanted to continue to expand, as good business would dictate, they were "encouraged" to play ball as per the Community Reinvestment Act- of itself not the sole reason for the collapse, but certainly a factor.
Those of us who would like to purchase real estate within the next decade or so will be doubly screwed by this: first, by having less to spend on a house via increased taxes, and second, by having to enter an artifically-inflated housing market.
If there is really an issue of paying $5 to avoid a $7 loss, perhaps, that is one advantage. Ideally, however, the proper solution would be to avoid the foreclosures, perhaps by large-scale negotiation between the banks and the homeowners.
The fact that there wasn't a subprime crisis until 2006 demonstrates that the housing market can function perfectly well with the CRA-encouraged loans. There is simply no way to scapegoat the CRA in this situation.
1) All applicants to this system are sorted into bins based on how much cash they put down on the purchase, e.g. 0-4.999%, 5-9.999%, 10-14.999%, 15-19.999%, 20-24.999%, etc.
2) Bins are then processed in order, from highest % downpayment to lowest. For example, the first month, anyone having problems in the 20+% down are helped. The second month, those with 15+% are helped. All people eligible system receive the same assistance. If the system runs out of money, a 3+ month waiting cycle must be entered, then the system resets.
3) Under no circumstances are those who put zero money down helped.
This proposal helps encourage those who've put down more $, and penalizes those who put down less.
In the Bear Stearns case it seems to be cheap non-recourse loans collateralized by some very shaky securities, so at least some of it is going to end up being free, quite likely.
whatever ya say...
At the end of the day, though, they're still mortgages. They represent house payments, or failing those, a house. Even if there are more foreclosures than normal, even if housing prices have fallen, those assets are NOT worth zero. Even if the government takes these mortgages and reissues them at better terms for the consumer to prevent foreclosure, that's not zero either.
What the government is doing is shoveling up these shaky securities, accepting them as collateral for actual money loans, to get them the hell off the balance sheets of companies that rely on being able to trade their assets to do business. In the worst case scenario, the government might have to spend a good amount of time analyzing these investments, figuring out which loans correspond to what, exactly who's behind on their mortgage payments, who needs relief, who doesn't deserve relief, etc... but there's still plenty of value left in either the "good" mortgages or the actual houses that the "bad" mortgages correspond to (or on refinanced "bad" mortgages which can be made good.)
Now, if the government was simply buying these securities and announcing it was forgiving the loans involved, THAT would be a total bail-out, and I'd resent it mightily. ;p
(Yes, yes, all this gets more complicated when you factor in "tranches". But that's okay. Paying people to sort it out will cost significantly less than just forgiving the lot. Hell, if they need someone, I'll come help.)
I didn't say they were. The question is whether they are worth the money being lent against them. To the degree they are not, it's free money.
No they're not, they're portions of mortgages bundled into packages and sold based on the expectation of an unsustainable run up in housing. Not only was it predicated on completely bogus anticipated increases, but it was also apparently based on the assumption that people would be able to pay back loans they simply couldn't afford.
It is nothing but a PONZI scheme and it is collapsing like one.
And this is a crock of shit, too. Let's see a show of hands. Which of you rugged, individualist, conservative mortgage bearers is refusing to take the mortgage interest deduction on your federal taxes? And also the property tax deduction?
Right, I thought so. Stop complaining about sucking on the federal teat.
Right, I thought so. Stop complaining about sucking on the federal teat.
Why shouldn't rugged, individualist, conservative mortgage bearers avail themselves of every last tax deduction for which they are eligible when the federal government has created that tax system? My guess is that most of them would prefer some sort of flat tax along with a federal government that spent much less of their money.
The fact remains that they are being subsidized by those who do not have mortgages. I.e., sucking on the federal teat.
Right, I thought so. Stop complaining about sucking on the federal teat.
This post is borderline insane.
Being for tax system reform is not the same thing as being a masochist. If you are calling for a fairer system, why does that mean you have to punish yourself by increasing your personal tax burden under the unfair system which you wish would change?
Problem is, many of those mortgages never were affordable to begin with. But for various reasons they got made anyway, which drove up housing prices, which made the mortgages look even better, which...and the whole process involved a lot of different parties, none of whom are categorically innocent.
So the whole thing really was unsustainable. So a collapse was unavoidable. The supply of housing exceeds demand and many people's (and companies') obligations exceed their ability to repay, which means prices must come down, and there's really no way around that. It's just a matter of deciding who takes the loss.
If the government can help unwind things by facilitating the necessary transactions, that's great. Facilitating markets is just the sort of thing a government should do. If it's just trying to shift the cost, that's bad. I haven't gone through the current proposal in enough detail to have an opinion on which it is, but based on prior performance I'm skeptical.
I do think that any use of taxpayer funds should be accompanied by an increased effort to find and prosecute all cases of fraud, whether by borrowers, bankers, appraisers, brokers, whoever. I don't know that fraud was a major driver in the whole thing, but it certainly did occur and it's silly to try to implement solutions that overlook that aspect.
On another note, CRA is obnoxious, drives up borrowing costs generally, and doesn't really help many low-income people, but it has nothing material to do with the subprime crisis. It takes time to comply with the documentation, but it never compels a bank to overlook underwriting standards or appraised values.
Classic liberal logic - the government lets you keep some of YOUR MONEY, and it's a "handout".
Also, rhetoric aside, support for big government doesn't disqualify you from being a conservative, unless you think Reagan wasn't a conservative. Sure, he cut the top marginal tax rate, but he also dramatically increased the size of the budget, jacked up payroll taxes, and escalated the War on Drugs.
Actually, no.
From a purely numerical perspective:
If the government does not collect $100 from you, it has $100 less to work with. However, if it gives you $100, it actually had to collect much more than that (say, $110 if very efficient, or $200 or more if inefficient) from taxpayers to give you that $100. The government does not operate for free; any process which it performs will have an operating cost, even if that process is rearranging money. There are records to be kept, people to hire, envelopes to lick, computer entries to be made.
From another perspective, via analogy:
You pay $20 for a bleacher seat in a baseball game. Two other people paid $50 and $80 each, respectively. Those seats were all accidentally double-booked. The ballpark gives each of you $50. Is that the same thing as if you had never bought the seats to begin with?
For some people, government handouts are fundamentally different things than tax deductions, as they are actually making money, directly, from the government. People who get tax deductions are also... wait for it... paying taxes. For other people, the handout is larger than any amount of tax that they may pay, and this does not even account for the various services which they are using.
except it's my money.
Why is it that people who screw up their home mortgages, or are losing their car, or who haven't found work in eight months, or who have been in this country illegally for three years but know no english, or people who invest their entire life's savings in one precarious company - why is it that the press always refers to them as "struggling", or "working feverishly to stay afloat", or "hardpressed", or . . . .
If they really were "struggling" - putting out an effort, thinking things through, planning, maybe putting off immediate rewards - they wouldn't BE losing their houses or cars or savings or . . .
So? That's the way it's supposed to be. The electric company wants its money no matter what. If you're a renter, your landlord wants his money no matter what.
"Govt" provides useful stuff, including the fire department, road building and maintenance, and the courts. "Govt" also provides some really stupid stuff, like invading a country at a cost of $3 trillion, on the lying pretext that it had to do with 9/11 (No, wait, it was the lying pretext that it had WMD) (No, wait, it was the lying pretext that we were going to democratize the Middle East) but, IIRC, it was conservative tax-cutters, not liberal big "govt" supporters, who pushed hardest to get us in to that quagmire.
The point is, taxes are the price we pay to live in a civilized society. Sometimes the "govt" spends money in ways you may not like -- sometimes even in colossally stupid ways -- but consider the alternative. There are no taxes in Somalia. Do you want to live there?
I'm under the impression that the IRS is over 99% efficient; that is, the cost of collecting taxes is less than one percent of the amount collected.
What government subsidy program has administration costs equal to the amount of the subsidy? Readers want to know.
Nice non-sequitor. The IRS collection efficiency is but one part of the efficiency of government. You CANNOT say, "Well, the government only expended $1 to get $100; therefore, the overhead cost of $100 of services is no more than $101.01." You MUST calculate in the efficiency of the various government bureaucracies. How much does it cost the federal government to account for the money? Pay people to manage it? Send it to various local agencies? Determine how much each area of the country should get? Pay people to ship the money? Pay people once the money is there to do good with it?
If you don't know what a hypothetical is, you need more help than I can give you.
If the general rule is that you pay X amount of taxes, reducing that amount by Y for taxpayer-specific reasons is exactly the same as if the government collected X and then cut a check for Y.
Of course, that argument changes when someone's taxes fall below zero, but a tax deduction that's unrelated to figuring out income is just a form of handout.
But, alas, liberals have figured out your logic. By shifting welfare-state-like benefits from direct subsidies to tax deductions, Democrats can often pick up Republican votes.
It seems to me that there probably is a modest difference between a tax deduction and a subsidy check (like say for price supports in agriculture where there is a bureaucracy figuring out if you qualify and figuring out what the price should be according to law and the new deal administrative legislature to which these bureaucrats answer, and that process is likely less efficient than some auditing of deductions by the IRS -- nevermind the kinds of bureaucracies surrounding various safety net subsidies like food stamps and welfare where there are a literal army of social servants involved in the provision of the subsidy.
But this argument eludes the obvious problem with the mortgage interest dedution (and possibly the deductibility of property taxes although the principle of double taxation requires a slightly different overall analysis) which is that this credit/subsidy artificially drives up the price of homes. It is grossly interventionist.
Brian
So you're saying the CRA was not a statute requiring banks to do business in unprofitable geographic locales, it was a requirement that banks do bogus, time-wasting paperwork to make it look like they were doing business in unprofitable geographic locales--and of course never had the effect of them doing more business in unprofitable geographic regions?
Your argument makes as much sense as saying Affirmative Action has no non-meritocratic effect on college admission practices...
Tours, TDP, ml, msl, &pfpp
I challenged you to identify a program that spends $100 to provide $100 in subsidies; you replied, "You MUST calculate in the efficiency of the various government bureaucracies," but didn't identify even one government program with an estimate of its overhead costs. theobromophile, you are capable of better than this.
So let's make it X/2 or X/10 amount of taxes from where we are now, and maybe there won't be so much pressure or scope for deductions or subsidies.
From EYESAY: ""Govt" also provides some really stupid stuff, like invading a country at a cost of $3 trillion..."
Not to mention farm subsidies, bankrupt socialized retirement and medical programs, and general mucking around with the economy. So let's cut out all the crap and get back to the basics as envisioned by the American Founders.
I believe that the Community Reinvestment Act was a response to the observed fact that many if not most American banks were not making loans to creditworthy people residing in low-income neighborhoods. It has no requirements for bogus paperwork.
TLV is entirely correct in saying that the Community Reinvestment Act was not a factor in the subprime crisis. As TLV said: "The CRA was enacted in 1977, so if it precipitated the irresponsible loans that caused the subprime crisis, why wasn't there a subprime crisis in 1978 (right after it was enacted)? How could the CRA not cause a subprime crisis for 29 years, and then suddenly cause one in 2006?"
May I suggest that you conduct a more in-depth study of the changes in banking law over that time span, specifically in the areas of branching and merger. Standing alone, the CRA was a constant, but changes in the surrounding system significantly increased its impact.
If these people were as credit-worthy as other borrowers, why was the CRA required? Businesses won't forgo risk-adjusted returns that are equal to or greater-than their existing business.
President George W. Bush is the first president to push for tax cuts while conducting a war. In the 1960s, one could credibly argue that Republicans more than Democrats would work to cut and eliminate government deficits. But those times have long past, and today, it is primarily Democrats, not Republicans, who are working to balance the budget. In this time of record deficits, it is simply irresponsible to follow your suggestion to cut taxes by 50% or 90%, and only then try to cut expenditures.
You criticize farm subsidies; I criticize them too. Your statement that Social Security is bankrupt is untrue. Even under the pessimistic middle projection, the Social Security Trust Fund will go at least until 2042 with no increase in taxes and no decrease in benefits. Under the optimistic projection, which has historically been the most accurate of the Social Security Administration's three projections, the Social Security Trust Fund can go forever with no increase in taxes and no decrease in benefits.
"Yes, but the Social Security Trust Fund is invested in Treasury securities, which are worthless!" I hear someone say. If Treasury securities are worthless, why are the Chinese government and millions of Americans and foreigners willing and eager to invest in them?
"Yes, but this isn't a real investment, because the Social Security surplus masks the deficit in the rest of the federal budget." Well, thank you for admitting that Social Security is running a surplus. This acknowledges that it's not bankrupt. The fact the rest of the federal budget is in a deficit? That is a problem with the rest of the federal budget, not with Social Security.
I do agree with you, by the way, that Medicare faces some serious funding problems in future. But I don't know if you would agree with my solution to medical care . . .
That assumes, incorrectly, that all businesses operate to maximize profits. But that can't be right. Until laws were passed to prevent it, hotels, restaurants, and other businesses refused to serve Negroes, as they were called then in polite society. Hotels were willing to turn away paying customers for no reason other than racism. I have news for you. Banks also turned away paying customers for no reason other than racism.
I remember watching on CBS's 60 Minutes program some years ago experiments where they would send black people and white people to banks to apply for car loans, and with the same economic qualifications, blacks were offered higher loan interest rates than whites. That is what life was like in the United States, 110 years after the Civil War, and the CRA was a response to that kind of bank-think that put prejudice ahead of profit.
Sorry to bust your bubble, but there is no trust fund. All there is is a pile of IOU's from the feds to the feds. As soon as the SS payments exceed the SS tax revenue, the difference will be made up out of general revenue, notwithstanding the pols' shell-game.
Chinese holding US securities? Just one more example of American pols living beyond their (our) means.
By the way, I'm generally capable of expressing myself without people trying to put words in my mouth.
Oh right. I forgot.
If a corporation invested its pension fund in U.S. Treasury securities, nobody would say that the pension fund didn't exist. U.S. Treasury securities are the safest investment on the planet. The fact that, at some point a decade or more from now, the Social Security Trust Fund will start to sell Treasury securities faster than it buys them suggests that the rest of the federal government had better get in balance by then, but it reflects no problem with Social Security itself.
Actually, several stories have been written. Many of these people work two or more jobs, but earning minimum wage or for tips doesn't pay a lot towards a large mortgage.
There are numerous stories of people who didn't know any better but bought houses way above their real value because they were naive. The buyers, of course, should share at least some of that blame. But let's not forget the agents who dazzled them with ideas that they could own a half million home on a maid's salary. And any mortgage company that approved a loan for any home that was assessed less than the purchase price should have to pony up.
These sharks benefited thed most from an unregulated market and the naivite of the buyers. They should have to chip in on this debacle.
so let me get this straight...it is tantamount to treason to suggest that US policies may have been a contributing factor to the terrorist attacks we face. but claiming that pearl harbor was caused by FDR is a-okay?
Uh, the fact remains that they are playing the game by the rules in force when they bought their houses, not playing Calvinball like the lenders and borrowers who want the government to insulate them from their bad choices.
Gee, the folks at my local library have The Winds of War shelved with the fiction books. I guess I'd better tell them to move it.
-- a lot of people were really dumb (buying a house in the overpriced neighborhood near the military base they're assigned to for just a few years, financing $780,000 on a house that five years earlier appraised for $350,000, assuming their live-in boyfriend will stick around and keep paying the mortgage when he won't even marry her, etc.,)
-- a very large (far, far larger than their share of the population) percentage of the people asking for help are working in fields which are extremely sensitive to housing market fluctuations: realtors, mortgage brokers, construction workers, etc. A very, very small percentage of people are in truly uncontrollable circumstances (diagnosed with an incurable disease, a toddler who inherited his single mom's house and mortgage after a boating accident, grandma went to prison, etc.(*)) I stopped feeling sympathetic towards husband-wife realtor partnerships a while ago, incidentally.
-- a lot of people are still really dumb ("dear bank, please ignore the $350 I spent at a day spa four days before writing this letter and think of my little children, who I won't take to McDonald's, becoming homeless and sad -- and also please ignore the seventeen times I went to McDonald's in the three weeks before I wrote this letter, to say nothing of the six times I ate at the Cheesecake Factory, and anyway won't you miraculously not issue a 1098 for the $500,000 I'm asking you to forgive on this loan?")
-- everyone thinks they can claim their town is one of the worst in the country for foreclosures. If you don't live in Port St. Lucie (I get several letters a week from there, and I'm not the only one processing,) I don't want to hear it.
-- mortgages appear to be, generally speaking, a great big scam. At least, I don't understand why anyone would agree to pay 6.75% compounding interest annually, on a balance of say $200,000, when they'll end out paying $300,000+ by the end of the loan. I mean, good golly.
-- bankruptcy appears to be insanely difficult or painful: no one wants to do it, even when it's obvious they should.
-- ditto for living in an apartment.
-- ditto for cooking at home, or even just eating cheap food at Taco Bell.
Incidentally, I am sunshine and happiness compared with some of the other people in my office. It's a good thing for mortgagors that the actual forbearance/short sale/etc. decisions are made on the investor side (Fannie Mae, et al) rather than by the cynical and stressed-out mail team at the bank. On most afternoons, I think the group would collectively say "suck it up and move out already."
Oh, for those who are in a default situation: don't put "URGENT!!! TREAT ME SPECIAL! I AM NOT A MORON!!" on the front of a fax. It doesn't work, especially when the only people doing that are the ones who waited till the last minute, didn't include half the stuff they were supposed to, and like to insult the bank staff in their cover letters.
(*) All examples are altered beyond recognition.
Unfortunately I've been working enough overtime that I can't really think clearly about public policy: beyond a generic "bah, why does the government have to be involved" reaction, I'm incapable of expressing a decent opinion on this particular bailout thing.
Eyesay--those businesses were obeying laws in discriminating against "Negroes". Or were you not aware of that?
It was a perfectly non-racist financial calculation for any business to make at the time that they were maximizing their profits by being discriminatory even if the business owners themselves thought Jim Crow was a crock.
Yours, TDP, ml, msl, &pfpp
Arkady, you sanctimonious prick. You realize that my mortgage deduction was priced into my house when I bought it right? And if my itemized deductions are $500 more than my standard deduction, the mortgage deduction is probably costing me money.
If a corporation issued a bunch of bonds which were bought by it's previously unfunded pension, would you see a problem with this?
Also, while I'd never argue that people are always rational, I think you assume too much when you claim discrimination proves businesses aren't profit maximizers. It isn't that hard to construct a model in which businesses maximize profits by discriminating. Say, if white people decide to stop patronizing businesses that serve "Negroes,:
"If a corporation invested its pension fund in U.S. Treasury securities, nobody would say that the pension fund didn't exist. U.S. Treasury securities are the safest investment on the planet. The fact that, at some point a decade or more from now, the Social Security Trust Fund will start to sell Treasury securities faster than it buys them suggests that the rest of the federal government had better get in balance by then, but it reflects no problem with Social Security itself."
First of all, if you lend money to me, that's one thing, but if I lend it to myself that's quite another. The SS "Trust Fund" is IOUs from the feds to the feds. It's a scam. It's backed by no saved wealth or productive resources, only the power and willingness of federal pols to continue to transfer money coercively from some people to others.
Second, it's one thing for the feds to run up a little debt from time to time, quite another to run up the monumental unfunded liabilities that SS and Medicare represent.
Third: To the extent that private retirement funds invest in stocks and private securities, the savings build productive resources that will be available to create the income that people need when they stop working. To the extent that private retirement funds are heavily invested in government securities, they too are part of the problem.
Fourth, US government securities will continue to be the "safest investment on the planet" right up to the day that they are not. Let's hope the pols don't screw it up that badly.
And now I am going to bed.
True enough, but others were arguing that there was a real distinction between tax loopholes and welfare payments. That's a different argument than just saying taxes are too high and government does too much.
Now, I'm off to spend your money at my government-paid job fighting the government. I like irony.
I object to the word 'sanctimonious'.
I must say, though, that my intemperate post seemed to have touched more than a few nerves.
+1 for the attempt.
thank you. enough anecdotes make data and while i suspected the demographics of those availing themselves of last minute repreives, your experience focuses and confirms those suspicions.
sanctimonious prickarkadyi can't figure out how far into his cheek deezrightwingnuts tongue was. he's right if you don't fix AMT that there is no subsidy in mudville, and he' right that the subsidy was priced into the house. But that is why we shouldn't do stuff like this with tax policy. It doesn't really make houses cheaper, just makes the tax bill less and the mortgage payment more. better to keep it transparent. given that prices are in freefall anyway, i can't think of a better time to get phase out the deduction. E.g. anybody who buys a house this year gets it, anybody who buys a house next year gets half of it and then future purchases don't qualify. Now folks who are in a good financial circumstance have inspiration to buy now stabilizing prices even for those who aren't selling their homes which is a measure of compensation for the lowered market worth they will have in consequence of the loss of the tax subsidy when they go to sell in after the two year window.
Of course you could make the declining schedule a little longer say 100% credit this year and declining by 20% a year over five. That rate of course applies into that particular taxpayers future relative to that particular home purchase.
So it could be used as an incentive to help the market find the bottom and get rid of the subsidy at the same time and the typical shills for the subsidy are in no position to complain.
Brian