Sunday, December 19, 2010

Ending Welfare... handout at a time.

What could welfare possibly have to do with Dunwoody? Well, quite a lot actually. Seems that many folks in our fair city have been and continue to be recipients of one of the most ill conceived government assistance programs on the books: The Mortgage Interest Deduction. The collapse of an artificially inflated real estate bubble gives this nation a clearer vision of routinely ignored bad real estate practices and policy, and offers an opportunity for action. And there will never be a better time to eliminate this disastrous tax loophole.

This particular corporate welfare has never made fiscal sense, but few things originating in the greed of narrow interests ever do. And let's be clear: that the money is laundered thru individual tax accounts does not change the fact that it is the legal firms, banks and real estate agencies that receive these benefits. This policy has artificially inflated home prices, supported an archaic, but highly profitable business model and made quite a few otherwise worthless people rich. Any buyer who has attended a closing is painfully aware of the fact that many people, none of whom contribute a tangible thing to the process, leave significantly wealthier, whilst the buyer leaves with debt and the risk associated with the underlying asset. Some seem to think the bank shares this risk, but they slept thru the brief discussion of Private Mortgage Insurance. Fact is the process of transferring a home from a seller to a buyer is extremely, and intentionally inefficient. It is simply wrong for this waste to be subsidized by our tax dollars.

It is also bad civic policy. The big reason buyers are attracted to ill-fated real estate ventures is a pervasive American desire to "screw the feds". Apparently mass delusion has taken hold and a majority of Americans think it is far better to pay a banker a dollar so they can avoid sending a quarter to Washington, than to take a hard look at what they can really afford and live within their means. As dim an opinion as you may have of the Federal Government, can anyone, outside of friends and family, really claim that bankers are a greater asset to society? Or is it the lawyers who really need this largess and the bankers are just a necessary evil?

At its very heart a real estate sale is a private transaction between a buyer and a seller. If either, or both, wish to engage third parties, inspectors, lawyers, or brokers, at their own expense, that is their choice.  For our government to get involved, with the end result of simply enriching these hangers-on, is a practice that can and should stop. Now.