Another Letter to My Senators

Here is one of this week's letters to Roberts and Brownback...

Dear Senator,

I am writing in regard to legislation you are voting on tomorrow that deals with a potential rescue of the housing market. From what I read, this bill is ripe with special interest and waste that is completely unnecessary. The people would be better served by letting housing prices correct on their own thus making homes more affordable for citizens who were responsible during the last 5-6 years. Instead, your legislation will reward careless and irresponsible behavior and force the responsible citizens of this country pick up the cost of these programs.

I like this piece in Slate published today by Daniel Gross:

The proposed tax break is hard to justify for several reasons. It does nothing for slow and steady companies that keep their heads and simply rack up profits year after year—and pay their taxes accordingly. Rather, it rewards the most reckless participants in the bubble. If you borrowed a ton of money to build spec houses in Miami and reported $2 billion in profits between 2002 and 2007 but gave up all those profits by notching a $2 billion loss this year, the extended carry back has a great deal of value. If you've been building affordable housing in Wichita, Kan., and booked $300 million in profits in those years, and then, through careful management of costs, managed to eke out a $5 million profit this year, it has no value. The big public home builders, whose shares rallied on the news of this potential tax break, didn't pay any windfall taxes on the bubble-era earnings. Why should they get an extraordinary post-bubble windfall?


So I ask, again, that government resist the temptation to help and simply let the market work. Congressional involvement will only make the situation worse as I am confident there will be many unforeseen consequences to your action. After all, the work of government is what started all of this mess in the first place.

Doug

My guess is government will not resist the temptation and will do something. Undoubtedly, this will make the situation worse...