October 31, 2012
DEFINING CONTRIBUTIONS:
Illogical Housing Aid (YONAH FREEMARK and LAWRENCE J. VALE, 10/31/12, NY Times)
[D]emocrats shouldn't be so quick to attack any change to the mortgage interest deduction. In doing that, they're depriving themselves of a potentially powerful tool for progressive governance, one that could greatly increase funding for affordable housing. In truth, the mortgage interest tax deduction benefits the rich far more than middle-income families. A 2012 study by the nonpartisan Center on Budget and Policy Priorities shows that of federal tax expenditures for homeowners, more than half goes to households with annual incomes above $100,000, about twice the United States median.Upper-income Americans take advantage of these policies to help them buy million-dollar homes, but there are relatively few federal housing dollars for extremely low-income families -- and even fewer for those in the next tier up, who earn between $20,000 and $50,000 a year. Rather than preserve the mortgage-interest deduction as it is now, progressive politicians would do better to redirect the benefits we currently provide to America's wealthiest homeowners to supporting housing for struggling and moderate-income families. [...]Since 2000, federal assistance to the poor through long-term subsidies of public housing and Housing Choice Vouchers (Section 8) has stagnated. A third program, the Low-Income Housing Tax Credit, encourages the development of housing for working-class families, but the affordability of the apartments it covers is guaranteed only for a limited time.Together, public housing and voucher programs serve roughly the same number of households as in 2000, even though the nation's population has grown by 33 million, or 12 percent, and the number of impoverished people has ballooned by 14 million, or 45 percent.Today, the federal government spends about $40 billion annually on housing programs designed specifically for low-income households. Yet the mortgage interest deduction alone costs the Treasury some $80 billion a year. Almost $35 billion in housing aid goes to families with incomes above $200,000.
Not only would expanding the voucher program and making them more generous--but limiting them to purchases, rather than rentals--serve to stimulate the economy by bringing back housing prices and help to get the poor out of the inner cities many are trapped in, it is also a brilliant/insidious way of undermining the other social programs by building up the savings of our most marginal citizens.
Posted by Orrin Judd at October 31, 2012 4:35 PM
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