More on the need to end the mortgage interest deduction and replace
it with more effective housing policy.

>?? ? 2008 Washington Post Writers Group
>
>? HOUSING POLICY: TURNING AROUND
>? THE DISASTER
>
>? By Neal Peirce
>
>????????A real mess.? There's no other way to describe national
>housing policy in America today.
>????????There's the massive subprime crisis -- caused in no small
>part by lackadaisical federal regulation.
>????????Fannie Mae and Freddie Mac -- mainstays of the
>multi-trillion dollar U.S. mortgage system -- face the biggest
>crises in their histories.
>????????We have a Department of Housing and Urban Affairs largely
>ignored by a White House either contemptuous of or oblivious to the
>critical nature of national housing policy.
>????????Finally, there's the grim fact: Millions of Americans still
>struggle to put a roof over their heads.? The National Low Income
>Housing Coalition reports there's not a single American community in
>which a minimum-wage worker can reasonably afford to rent an
>apartment.
>????????Sums of federal housing assistance do flow -- some through
>public housing and federal "Section 8" renter subsidies.? But the
>vast majority of federal housing expenditures -- roughly $80 billion
>a year -- finance the home mortgage housing deduction.? Only 30
>percent of taxpayers use it.? Applicable to homes worth up to $1
>million -- even rich second home "McMansions" -- it overwhelmingly
>benefits the richest Americans.?
>????????So -- assuming Fannie Mae and Freddie Mac can be stabilized
>-- where do we go from here?
>????????Tackle the mortgage deduction head-on, counsels Bart Harvey,
>recently retired chairman of Enterprise Community Partners, a major
>national nonprofit that helps finance housing for low-income
>families.? "Even in a time of fiscal distress, it can be done,"
>Harvey told guests at a National Housing Conference gala recognizing
>him as "Housing Person of the Year."
>????????The federal dollars now used for the deduction, said Harvey,
>could be shifted to people in real need of housing.? One suggestion
>is to convert the deduction into a straightforward tax credit for
>low-income renters, or to benefit middle-income renters or
>homebuyers in highly inflated local housing markets.
>????????But at the same meeting where Harvey spoke, staffers from
>the Senate Banking Committee told me it would never happen -- that
>the resistance of the homebuilders and real estate industry is so
>fierce that the deduction is an untouchable "third rail" of American
>politics.
>????????Maybe so.? But it's also true that in 2005 President Bush's
>bipartisan Advisory Panel on Federal Tax Reform endorsed converting
>the mortgage deduction to a less regressive tax credit.? And our
>demographics are changing.? A big wave of "millennials" -- would-be
>homeowners in their mid- to late-20s -- is now fast approaching,
>notes John McIlwain, the Urban Land Institute's top housing expert:
>"If they received a benefit, there'd suddenly be a huge rise in
>housing demand -- which the homebuilders should be ecstatic about."
>????????Right now, Congress has an opportunity to help low-income
>renters by approving the National Affordable Housing Trust Fund.? It
>provides a significant new opportunity to assist low-income renters,
>with funds from the Federal Housing Administration and contributions
>by Fannie Mae and Freddie Mac (when, hopefully, they're back on
>their feet).???
>????????A next big breakthrough would be to restore HUD, now
>thoroughly demoralized by scandals and the current administration's
>disinterest, to its preeminence under such past secretaries as Carla
>Hills, Patricia Roberts Harris, Jack Kemp and Henry Cisneros.?
>Imagine the next president appointing a forceful ex-mayor like Tom
>Murphy of Pittsburgh, an urban policy whiz like Bruce Katz of the
>Brookings Institution, or a seasoned housing professional like Bart
>Harvey.? With a will, we could have top-notch leadership and a
>rejuvenated agency staff focused on a full spectrum of housing for
>all Americans.
>????????Though maybe with a caveat-- to rename HUD the Department of
>Housing and Metropolitan Development, suggests McIlwain. Why?? To
>think more expansively, to make connections, he says: "No other
>developed country lacks a national policy on cities, recognizing the
>vital importance of urban regions.? We need such a policy -- and
>department."
>????????Incentives for coordinated development could be built not
>just into housing, but also highway or transit bills, requiring our
>nationwide set of Metropolitan Planning Organizations to take on
>land use, working with city and suburban governments to limit
>wasteful outward sprawl of regions.
>????????But a HUD focused especially on cities and housing could be
>a special steward of the new relationships, providing incentives for
>core cities and suburbs, which increasingly need housing supports,
>to work together.?
>????????Plus, a new HUD could watch to see that housing has
>meaningful income mixes and works hand-in-glove with transportation
>-- making sure, for example, that when federal housing dollars are
>used, there will be upgraded zoning around highway interchanges or
>transit stops, thus providing higher density, more energy-efficient
>and socially inclusive housing together with job-providing
>commercial development.? That way, isolated housing "projects" for
>the poor and federally-financed roads to developers' greenfield
>projects would be history.
>????????We could do all these exciting things.? But first, we'll
>have to make some smart choices -- candidates with vision, and some
>tough political hides -- in the November elections.

--
Jon Morgan
Seattle, WA
AIM/Skype: JonSM99

http://my.barackobama.com/page/dashboard/public/CGCxS

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