Tuesday, April 8, 2008

There Goes the Neighborhood

If you are not one of the folks who over-extended yourself by purchasing a home you couldn't afford by entering into a mortgage you shouldn't have qualified for, and should have known was going to go up, you're going to pay any way. After all, this is America. Land of the safety net.

...and the falling dollar.

It appears there is no one left in Washington that has any respect for the taxpayer or our financial fitness as a nation.

Congress is going to stick it to the rest of us and give the money to one of the most notoriously ineffective agencies in the Federal Government.

Majority Leader Harry Reid's bipartisan "housing stimulus package" hits the Senate floor on Tuesday afternoon, and what it proves is that, whatever their other differences, both parties can agree to throw good money after bad. The bill is a $15 billion list of subsidies that won't do much for housing markets but will please the homebuilders, local politicians and other influential lobbies.

Among the largest items is $4 billion for notorious Community Development Block Grants. The money is intended to purchase and redevelop foreclosed properties. It's hard to think of a less promising vehicle than the CDBG program, which is managed – after a fashion – by the Department of Housing and Urban Development. A February 2008 report from the White House budget office calls the program "ineffective," which is putting it mildly. On a 100-point scale of achieving results, CDBG scored a 27.

The main Republican contribution (thanks to Georgia's Johnny Isakson) is a $7,000 tax credit for those buying homes out of foreclosure. This means that Americans who behaved responsibly and paid their mortgage but are now trying to sell their homes will have to cut their offering price by $7,000 to compete with foreclosed properties nearby. Thus does the Senate contribute once again to tax fairness and personal responsibility.

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