NYT Launches War vs. Mortgage-Interest Deduction

The featured piece in today’s NYT is “How Homeownership Became the Engine of American Inequality”, which launches what will probably be their War Against the Mortgage-Interest Deduction (MID). The piece begins with the usual:

The son of a minister, Ohene Asare grew up poor. His family immigrated from Ghana when he was 8 and settled down in West Bridgewater, Mass., a town 30 miles south of Boston, where he was one of the few black students at the local public school. “It was us and this Jewish family,” Asare remembered. “It was a field day.” His white classmates bullied him, sometimes using racial slurs.

Both immigrant African blacks and Jews the ‘target’ of bullies! Imagine that! And we know who must’ve been behind that bullying: evil white people.

Almost a decade removed from the foreclosure crisis that began in 2008, the nation is facing one of the worst affordable-housing shortages in generations. The standard of “affordable” housing is that which costs roughly 30 percent or less of a family’s income. Because of rising housing costs and stagnant wages, slightly more than half of all poor renting families in the country spend more than 50 percent of their income on housing costs, and at least one in four spends more than 70 percent. Yet America’s national housing policy gives affluent homeowners large benefits; middle-class homeowners, smaller benefits; and most renters, who are disproportionately poor, nothing. It is difficult to think of another social policy that more successfully multiplies America’s inequality in such a sweeping fashion.

The piece gives short shrift to the concept and use of Section 8 housing, implying that there’s 10 year wait times are an average:

The last time Boston accepted new applications for rental-assistance Section 8 vouchers was nine years ago, when for a few precious weeks you were allowed to place your name on a very long waiting list. Boston is not atypical in that way. In Los Angeles, the estimated wait time for a Section 8 voucher is 11 years. In Washington, the waiting list for housing vouchers is closed indefinitely, and over 40,000 people have applied for public housing alone.

But what are the wait times in smaller cities, or better yet, out in smaller towns? I suspect it is significantly less and may be a direct reason we are seeing the urban poor moving, increasingly, into these smaller towns. For example, here’s a recent article about Passaic NJ’s Section 8 program (Passaic is a small city of about 70,000), with a Housing Authority Director saying the wait times are between 1 and 3 years. (As another, different type of example, here’s an online scumbag offering a ‘book’ that tells you how to cheat and lie to get moved up the Section 8 waiting list.)

The writer of this piece then goes into full activist mode, not reporting but prodding:

Recently, Gary Cohn, the chief economic adviser to President Trump, heralded his boss’s first tax plan as a “once-in-a-generation opportunity to do something really big.” And indeed, Trump’s plan represents a radical transformation in how we will fund the government, with its biggest winners being corporations and wealthy families. But no one in his administration, and only a small (albeit growing) group of people in either party, is pushing to reform what may very well be the most regressive piece of social policy in America. Perhaps that’s because the mortgage-interest deduction overwhelmingly benefits the sorts of upper-middle-class voters who make up the donor base of both parties and who generally fail to acknowledge themselves to be beneficiaries of federal largess.

The NYT (which is the clarion call for the Democratic Party) wants you to take an instant 13-17% clip on the value of your home:

It’s impossible to say how much, but a widely cited 1996 study estimated that eliminating the MID and property-tax deductions would result in a 13 to 17 percent reduction in housing prices nationwide, though that estimate varies widely by region and more recent analyses have found smaller effects. The MID allows home buyers to collect more after-tax savings if they take on more mortgage debt, which incentivizes them to pay more for properties than they could have otherwise. By inflating home values, the MID benefits Americans who already own homes — and makes joining their ranks harder.

There is this salacious charge:

The owner-renter divide is as salient as any other in this nation, and this divide is a historical result of statecraft designed to protect and promote inequality.

… with the piece treading into the leftist allegations that Steve Sailer has often pointed out, that is, those dastardly banks doing redlining:

… which denied loan applications in nonwhite neighborhoods because the Federal Housing Administration refused to insure mortgages there. From 1934 to 1968, the official F.H.A. policy of redlining made homeownership virtually impossible in black communities.

Then, we have the assertion of a direct causal effect:

“The consequences proved profound,” writes the historian Ira Katznelson in his perfectly titled book, “When Affirmative Action Was White.” “By 1984, when G.I. Bill mortgages had mainly matured, the median white household had a net worth of $39,135; the comparable figure for black households was only $3,397, or just 9 percent of white holdings. Most of this difference was accounted for by the absence of homeownership.”

Most of the difference? What about the roles of: a penchant for saving (e.g., deferred gratification)? Not dropping out of school and being forced into low wage occupations (or no occupation at all)? IQ differences? Not having 4+ kids? The transient ‘back and forth to Mexico’ nature of illegals in the U.S.? Furthermore, the above paragraph appears to conflict with this one:

Differences in homeownership rates remain the prime driver of the nation’s racial wealth gap. In 2011, the median white household had a net worth of $111,146, compared with $7,113 for the median black household and $8,348 for the median Hispanic household. If black and Hispanic families owned homes at rates similar to whites, the racial wealth gap would be reduced by almost a third.

That still leaves 2/3.

Onto our moral lesson of the day:

Racial exclusion was Roosevelt’s first concession to pass the New Deal; his second, to avoid a tax revolt, was to rely on regressive and largely hidden payroll taxes to fund generous social-welfare programs. A result, the historian Michelmore observes, is that we “never asked ordinary taxpayers to pay for the economic security many soon came to expect as a matter of right.” In providing millions of middle-class families stealth benefits, the American government rendered itself invisible to those families, who soon came to see their success as wholly self-made. We forgot because we were not meant to remember.

After the MID is eliminated, here’s a hint at what the next, logical, progressive, NYT, related cause will be:

The biggest barrier to buying a first home is saving enough for a down payment, a problem the MID does not solve…

Certainly, there is a moral obligation to provide historically oppressed races with the down payment on a house.

The article then turns to the real estate lobby (aka Big House) working hard to stop any modifications to MID, the fault of those evil Republicans!… Er… I think…:

After the Republican-led Ways and Means Committee proposed modifications to the MID in a draft of the Tax Reform Act of 2014, the association issued a statement saying it was “extremely disappointed.” The act did not propose to eliminate the MID but simply to cap the amount of deductible mortgage debt at $500,000, as opposed to the current cap of $1 million. (Second mortgages are capped at $100,000.)… It was the only time in its 104-year history that the MID has been altered…

When it comes to public housing for the rich, it becomes hard to break the cycle of welfare dependency. It’s why some Democratic leaders who represent districts with high housing prices, like Representative Nancy Pelosi (San Francisco) and Senator Chuck Schumer (New York), have been outspoken critics of MID reform, even if they are consistent backers of other equality-promoting initiatives.

Oh well.

In any event, another proposed solution? More construction of subsidized housing. Rapido!

In some markets, there are virtually no affordable units left. The median annual rent for a two-bedroom apartment is currently $39,600 in Boston, $49,200 in New York City and $54,720 in San Francisco. Families priced out of large cities have moved to smaller ones, and now those cities are experiencing some of the steepest rent increases in the nation. The poor used to live on the other side of the tracks. Now they live in different towns and counties entirely.

Then more moral preening. It’s astonishing that this qualifies as an in-depth ‘report’ in the vaunted NYT:

We tend to speak about the poor as if they didn’t live in the same society, as if our gains and their losses weren’t intertwined. Conservatives explain poverty by pointing to “individual factors,” like bad decisions or the rise of single-parent families; liberals refer to “structural causes,” like the decline of manufacturing or the historical legacies of racial discrimination. Usually pitted against each other, each perspective serves a similar function: letting us off the hook by asserting that there is a deep-rooted, troubling problem — more than one in six Americans does not make enough to afford basic necessities — that most of us bear no responsibility for…

Poverty and homelessness are political creations. Their amelioration is within our grasp and budget. But those of us most likely to vote and contribute to political campaigns are least likely to support MID reform — either because it wouldn’t affect our lives or because it would, by asking us to take less so that millions of Americans could be given the opportunity to climb out of poverty. It’s just that we usually don’t dial our elected officials when our less-fortunate neighbors are hurting, because we are not.

Regarding the writer of this piece:

Matthew Desmond is author of “Evicted: Poverty and Profit in the American City,” which won a 2017 Pulitzer Prize.

Of course he won a Pulitzer.

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