The Republicans have so little power in Washington right now that they’re grasping at the thinnest reeds in hopes of influencing the final stimulus bill. It’s going to be real tough to add substantially more tax breaks to the package, especially since so many people are convinced that we got into this mess in part because of Bush’s tax breaks — even though there’s little evidence in favour of that.
Their best bet is to take up the cause of struggling homeowners. This is smart politics. When people look at all the garbage in the bill, it’s understandable for them to ask: Wait, you’re funding some ATF gun-running abatement program and some new NASA research before you’re helping me with my mortgage?
So Republicans have latched onto housing. First they’ve proposed that the government make another effort to push mortgages down to 4% for anyone that’s “qualified” (we’re not sure how they define qualified, which is why we put it in scare quotes). Now they’re talking about a new tax credit for homebuyers. Yesterday on CNBC, Sen. Lamar Alexander even talked about stimulating the homebuilding market again, because that would employ plumbers, and Sub-Zero refrigerator makers once again. Basically: Cheap mortgages, subsidies for homeowners, and an overabundance of housing units. In other words: exactly what got us into this mess.
That’s the “fix.” Funny cause we’d have thought the fix would be something along the lines of getting off the notion that a home should be an engine of wealth creation, and that an economy can sustain itself just on building dwelling. But the fix is the return to the status quo.
If there’s one blessing in the current economy, it’s the return of housing affordability. As incomes fall and joblessness rises, at least homes have gotten cheaper. Imagine how much worse things would be if everything had gotten worse, but homes were still in the nosebleeds.