Wednesday, November 10, 2010

Eliminating the Mortgage Interest Deduction!?

Greg Mankiw says this is being recommended. What sort of sane people are these!?
This is actually somewhat personal for me. In 1979, when my father was Chief Economist (or higher) at the Canada Mortgage and Housing Commission (or whatever CMHC stood for then) the Conservative Party ran with mortgage interest deductibility as part of its campaign platform. He was publicly opposed to this policy. In fact, late in the campaign he gave a widely-noticed public speech explaining clearly why this was simply BAD policy (not least because it redistributes money to the rich from the poorer).
The politician who wound up as housing minister threatened to fire him for this.
When she took office, it turns out they managed to work together and that policy plank was NEVER implemented. And he was not fired. In fact that government found one night they could not count, lost a vote of confidence, and got booted out of office fairly quickly.
But I do not readily forget the childish threats and the stupidity of the policy. Needless to say, I got to hear a lot about what was wrong with the idea just by hanging around my father.
Now it is a hell of a lot harder to reverse a bad policy like the US mortgage interest deductibility than to stop the installation of something so dim-witted, as he helped do in Canada.
But I wish good fortune on this case! I suspect most economists do. (I do not mean that I am economist.)


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