Roenblog:

INVESTOR’S BUSINESS DAILY  Posted 8/28/2007    

Washington: Rep. John Dingell plans to introduce a bill that would strip away the mortgage deduction for taxpayers who live in homes larger than 3,000 square feet. Does he want a step-off-the-cliff recession?

The Michigan Democrat’s grand goal is to discourage energy use — and it smacks of a political favor. This is the man who refuses to allow his party to increase fuel mileage standards in the auto industry that he represents, so he clearly feels that he must give his colleagues something. In reporting Dingell’s bungle, Canada’s Financial Post wrote that he “is stirring up a hornet’s nest” because of the mortgage interest deduction’s popularity. But thanks to a growing streak of hostility toward large homes — maligned as “McMansions” — fostered through resentment created by environmentalists and class warriors, his ill-advised legislation, part of a larger carbon tax bill, actually has a chance to pass the House. 

 More after the break:

We would expect that such foolishness would be vetoed by President Bush should it ever reach his desk. But let’s consider what would happen if Dearborn Dingell’s fevered solution became law. The nation is already mired in a housing slump. New and existing home sales are down 10% in 2007, and that trend is expected to continue into next year. Does Dingell think killing a significant incentive to buy a large house will help pull the country out of the slump? At the beginning of this year, the gross worth of U.S. housing stock was $20.6 trillion. With about one of every 10 homes being larger than 3,000 square feet (that’s about 10 million houses), at least one-tenth of that worth is going to fall substantially. A measure of our wealth would take a hit in the same way wealth was destroyed when the value of equities plummeted in the early part of this decade. But the effects could spread beyond the owners of big houses. Lawrence Yun, senior economist for the National Association of Realtors, reckons that killing mortgage interest tax deductions for homes larger than 3,000 square feet would cause a 4% fall in the national median price of all homes. Has Dingell considered that the abrupt loss in wealth could trigger a sudden descent into a recession? Or that such a policy could qualify as the equivalent of a government taking, which is prohibited by the Fifth Amendment? Like all attempts to cut carbon dioxide emissions, Dingell’s legislation is envy-driven. The environmentalist lobby pushing a willing Democratic Party on carbon emissions is full of jealous leftists who hiss at any sign of conspicuous consumption: less-than-modest homes, big cars, large boats, overflowing bank accounts, anything that represents abundance and material prosperity.  This movement is eager to enlist the state’s help in forcing an entire nation to adopt the ascetic lifestyle that it sees as the ideal, having succeeded already in swaying three cities — Atlanta; Austin, Texas; and Edina, Minn. — to outlaw large infill homes. A recession that slows growth probably sounds like a good idea to its members.