Hair of the Dog
Isn't this exactly the type of government policy that helped promote the housing bubble and in turn led to our current recession?
WASHINGTON (AP) "” The Senate voted Wednesday night to give a tax break of up to $15,000 to homebuyers in hopes of revitalizing the housing industry, a victory for Republicans eager to leave their mark on a mammoth economic stimulus bill at the heart of President Barack Obama's recovery plan.
Republicans: We want to prove we can do stupid, populist sh*t too!
Update: Via TJIC, more hair of the dog:
Fannie Mae, the mortgage-finance company under U.S. government control, will loosen rules for homeowners seeking to lower their loan payments by refinancing.
Fannie Mae will drop some credit-score requirements, reduce income-documentation standards and waive the need for appraisals in some cases"¦
ElamBend:
With every bit of resistance they give to this stimulus-fest, they come up with equally dumb ideas as counters. It's maddening
February 5, 2009, 11:06 amMark:
The problem is that the political winds are blowing in the opposite direction of what we may believe to be correct.
THe reason why this economic downturn is so frightening for people is that it is a real estate bubble. I know this is stating the obvious, but for these millions of people much, if not all, of their net worth was wiped out.
People vote their interests. The stimulus plan and its related cousins are plans that will be in the individual interests of this large majority. Inflation is an economic problem, but it is mainly a problem for creditors. Most people today are not only large debtors (including the federal and state governments) but are upside down in their debt. When you owe more on the assets you have, it is a very sketchy situation and these voters demand change.
So, over the near term, there is little that can be done to prevent these economic proposals. The political will is massively behind it.
But, someday the impact of the policies will come home to roost. Then we will have an opportuninty to correct.
February 5, 2009, 11:20 amMatt:
Let's also not forget that we may be able to write off interest and sales taxes on new cars purchased in 2009. I wrote about it in the post entitled 'Cars for Everyone.' Why can't we just allow the market to deleverage and correct?
February 5, 2009, 12:21 pmDaveK:
And I'll bet this so-called tax credit is only just a tax deferral... Just like the last real estate credit they rolled out. Sure, we get to take the credit if we buy the house. But then we get to pay it back over the next several years. Same as the so-called stimulus payment we got early last year. That added right onto my tax bill this year. Some help there, just exactly at the time when more money in my pocket would have been really useful!
When I get a tax credit like this, I'm a lot more likely to tuck it away in savings instead of spending it, when I know I've got to give it back to the government pretty soon. Even though it's an interest-free loan, you can't really call it "free money".
February 5, 2009, 1:57 pmBilly Beck:
"Hair of the dog"?
We're talking about the fur of the wolf, mate.
February 5, 2009, 4:27 pmWhoa, pardner:
Whoa. Reductions in taxes are NEVER populist. (Certainly 'popular', but never 'populist.') You want to look long and hard before rejecting ANY reduction in taxes.
Government can never distort the market nor promote bubbles by REDUCING taxes. The distortion/bubble comes from the taxation that remains, and is STILL IN PLACE elsewhere in the market.
Ubiquity of taxation is not an end to be desired, in the name of egalitarianism (or in the name of anything else.) Even if tax redction doesn't come at an even rate across the board, it is still good, and always good.
A step toward reduction in taxes is a step toward a private-property-based system.
February 5, 2009, 6:23 pm