The National Association of Home Builders has created a website explaining the new $7,500 tax credit provision in Congress' latest RE bailout package. You have dig to into their website to see where they admit that the credit operates like a loan and those who take it will be required to pay $500 extra in Federal taxes for the next 15 years.
The Problem: In 2005, unscrupulous people encouraged people to buy more house than they could afford. The government went along with it thinking that more ownership, even highly debt-leveraged ownership, was always a good thing.
The Washington Solution: In 2008, unscrupulous people are encouraging people to buy more house than they can afford. The government is going along with it and even providing tricky tools to help them do it. The treatment for a borrowing binge hangover is a hair of the dog that bit you.
I wonder how much it costs the IRS to keep track of who got this credit up to 15 years ago. I wish the government would work out how much administration plus interest costs and just pay it directly to the special interests. Leave innocent people out of it.
The federal government is helping unscrupulous people suck money from the poor.
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As bad as the tax credit is, it does seem like spare change compared to the $300 billion in bad loans the FHA is going to insure with our tax dollars, or the untold billions of dollars which the GSE's are going to cost the taxpayers while operating their businesses at massive losses now that they have explicit government backing. The GSE money funnel, in particular, is much more offensive to me because they gave billions in profits to executives and insiders, and now we are directly pumping money into them, and they are directly giving it to banks, speculators, and underwater borrowers. Despicable.
ReplyDeleteit does seem like spare change compared to the $300 billion in bad loans the FHA is going to insure with our tax dollars
ReplyDeleteI agree wholeheartedly. GSEs should either be government agencies or totally private companies, preferably the latter.
I wasn't thinking about the money. I was thinking about the irony that this one part of the proposed solution, i.e. giving people more house debt, sounds exactly like the problem.
Charles - just a heads up, I gave you a cameo in the video of the day over on CR. Enjoy.
ReplyDeleteP.S. You do realize the 'other' walkie-talkie is on your hip, right?
The other one? When I walk in the mountains or hilly areas where I might have a chance for long line-of-sight paths, I usually carry at least two. I like to make at least one long path contact per hike.
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