Short-term jobs paid for via long-term debt doesn't seem to be a very sound economic model. Six months worth of jobs, at the cost of 15 - 30 years worth of debt, doesn't sound sustainable. The only time this model lead to widespread economic prosperity was during the last decade, we all know how that turned out.
Comparing the ARRA to a long term economic model is silly. The ARRA is a stop-gap plan that bridges or adds funding to certain sectors to help "stimulate" the economy. Just because the economy doesn't have a massive woody right now, doesn't mean it's maybe a little less limp than it was before. I think it's too early to tell how good or bad the ARRA has been. For all we know the economy might be sporting a massive inny right about now without the ARRA. Suggesting that people should go out and "stimulate" the economy by going into debt with mortgages is just setting up a daisy-chain like what we had with the housing crisis. That's a bit different than a once off stimulus package. The housing market can play an important part in the economy, but by no means should be be looking to it to get us out of the mess it created.
You're right... mortgages have only been around for the last 10 years. Until then, everybody bought their house with cash. Regardless, Mobes asked about the effect on the current housing market. He didn't ask about the effect on the long term economy. Perhaps you're in the wrong thread?
Hello Mcfly... the question was about the current housing market, and short-term economy. You're the only one trying to compare the ARRA to a long term plan. Two things: 1) People have the choice to take on a mortgage or not. People didn't have a choice to be burdened with Obama's spending and massive deficits. 2) Mortgages weren't responsible for the housing crisis. People getting loans they weren't qualified for cause the housing crisis.
The Dems in the Senate (well, three didn't cast a vote, including one GOP) just voted for default, and they won't even debate this bill. Time for them to propose their own plan, and put it up for a vote. Any plan is better than your lack of a plan, Harry Reid.
The Senate Dems have now voted down the following. Paul Ryan's Budget Barack Obama's Budget Cut, Cap, and Balance all while not offering up any bill of their own. They own the upcoming default at this point.
I would be fine with having a lower cap or eliminating the mortgage interest deduction. I believe tax deductions and credits should be for the minimal non-luxury expenses required to produce income. You don’t tax a business on supplies or materials because those expenses are needed to produce revenue. You tax the business on the net income. Similarly I believe individuals shouldn’t be taxed on the minimal food, shelter, clothing, work transportation, health care, and education required to work a job and live a minimal life. But we should be taxed on all additional expenditures because those are not required to live and work, they are optional and purchased for pleasure. An individual deducting $25,000 of mortgage interest has a luxury house, they don’t need that expensive of a house to work, they have it because it’s a luxury item they want. Just as having a $80,000 car is a luxury item, or eating a $60 dinner is a luxury item. Those expenses are not required to produce income and thus shouldn’t be deductible. Why should the government subsidize the cost of housing? If you can’t deduct the cost of food from your income taxes why can you deduct housing? The mortgage deduction does keep real estate prices artificially higher, so that makes owning a home more expensive for some people. Additionally, I would like the elimination of the capital gain exclusion on selling a primary residence. Instead a rule could allow something similar to the business section 1031 exchange, where you can roll over your basis into a similar property and defer tax impact.
The govt. isn't subsidizing anything. The deduction is on the interest you pay but not the principle. They're playing along with you as you leverage the debt into ownership of the asset. When you sell, they get their tax money in the form of capital gains tax. Your logic about not taxing the supplies or materials needed to realize a profit applies here.
Okay? What does that have to do with anything? Mortgages aren't bad on their own, they're just bad when people obtain them & can't pay them back. Then why are you talking as though mortgages are one of the better ways normal people can leverage resources to create jobs. Not every new mortgage equals a ton of jobs? A new mortgage on existing house will create very few jobs compared to someone building a new house. Given that the market is depressed, people are more likely to buy an existing house than build a new one.
Maxiep was suggesting the ARRA was netting short term jobs at the cost of long-term debt. The ARRA is a bit different than relying on people taking out mortgages to create short-term or long-term job growth. I'll trust the fed taking on debt to "stimulate" the economy, rather than relying on people taking out mortgages to stimulate the economy. This is the reason why... Fact is, there are much much fewer people who qualify for a mortgage now & there are many many empty properties out there right now. Buying a house is going to enrich a realtor & maybe some inspectors, it's not going to spur much job growth short or long term. The only way it'd have a real effect is if we ramped it up & started another bubble, kind of like what China is doing right now.
So we’ve had the government by Freddie and Fanny, qualifying people for mortgages they can’t afford. The government also lowers the cost of home ownership through tax deductions. Both of these interventions cause prices to be far higher then they would be in a free market. How about getting the government the heck out of the housing market? Let prices fall until it becomes profitable for private investors to be landlords. Then private investors who can afford a bank loan on their own can buy housing and a tenant who cannot afford to own a house can pay rent. If a renter starts making enough money, they can go to a bank and apply for a home loan just as people have to qualify for business loans or car loans or six figure credit card loans. In college I and many of my friends were broke but some of our friends or friends parents had enough money to buy a house, so they bought houses, let us live there, and charged us rent. I believe that’s a much better housing model then trying to push home ownership on people who aren’t financially ready.
No I don’t believe we have a revenue problem in total, I believe a few taxes are too low and many are too high. If I was king of the US and could setup our federal government to my wishes I'd drastically cut spending and push most responsibilities to the states. I'm more of an articles of confederation guy. I believe the majority of issues are better solved locally. If we reduced the mortgage interest deduction, I would prefer the savings go mostly towards lower tax rates, but some towards higher standard deduction, higher medical expense deductions, or even a food deduction.
Boehner ends negotiations with Obama, says GOP has passed a bill, while Dems haven't even offered a bill. Obama then had a meltdown on TV as he calls a "press conference" without actually taking questions. Also says he has "special interests" that he needs to listen to, which was simple surreal. Wow, that was something, wasn't it? Oh, you haven't heard about it? I'm not surprised.
The government doesn’t allow you to deduct interest expense on a luxury car, or a boat, or a diamond. They do allow it on a luxury home. This reduces the cost of carrying a mortgage, which encourages home purchase or a purchase for higher values. I would call this partially “subsidizing” the cost of owning a home but you could call it something else; the point is the government gives favorable debt treatment for personal housing debt comparative to any other personal debt. If you sell the house at a gain the government doesn’t re-capture the interest; a gain is calculated from the basis of the home which includes purchase price, improvements and additions. Previously claimed interest isn’t deducted from the basis of the home. Also, $250k of the gain is tax free capital gains anyways.
You think if you just make shit up no one is going to call you on it? He took questions. Here's a transcript. Yeah, that doesn't appear in the transcript. No doubt the same government conspiracy that bombed Oslo removed it from the transcript. Or maybe it has the same basis in fact as him not taking questions. barfo
