A dirty little secret

But first, my Republican debate recap....

What happened to the sniping, and the jibes at The Donald's hair, and Ben's days as a juvenile delinquent?  NOTHING!  It never came up.  So boring!

Actually it was a fairly respectful exchange of real ideas.  For that I give credit to the moderators from the Fox Business News channel for doing an excellent job.  They didn't try to blindside anyone, they asked meaningful questions, and when the candidates gave rather soft, squishy answers, they followed up, "So to make this clear, you're saying you're NOT in favor, is that correct?"  Bravo!  They didn't let anyone do an end run as most politicians will do if given a chance.

Mark O. Rubio is IMHO the slickest of the bunch.  He is an excellent speaker, has good hair, was never rattled, but seemed to use too much "politician speak" to suit me.  He often speaks in non-controversial terms like "promoting family values" and "my parents were working people who loved us and worked hard to provide for us".  Well duh....who isn't for that?  He's definitely the voice of the Republican Washington establishment.  He did have some concrete ideas for immigration reform, though.

Carly Fiorina came across as the most hawkish on a stage of (mostly) hawks.  I'm thinking Donald Rumsfeld and Dick Cheney were watching at home saying, "Damn!  She's tougher than either of us!"  But she was almost scary looking....properly erect, glaring eyes, not smiling, almost gritting her teeth when she spoke.  Her demeanor reminded me of one of those bad boy Germans from the 1930's.  Her proposal for a zero-based budget is good, but the crooks inside the Beltway are not about to give up their slush fund.   Not going to happen!

Jeb did his best, but he still fell short.  Dr. C seemed in control, if not break-out hot, Donald Trump managed to muzzle his mouth fairly well except for one jab at Carly, Rand Paul....or is it Paul Rand?....is still wearing his tin foil hat, and even Ted Cruz (I almost throw up in my mouth when I say his name) made some good points.  Being the pragmatist that I am, I liked John Kasich, but as he's not one of the "beautiful people", I don't see him going anywhere.  So be it.

Now for my dirty little secret....

The Repub's talked much about tax reform, the common thread being the popularity of a simple flat-percentage tax and doing away with most deductions and loopholes, except the home mortgage interest deduction.  They argue it promotes home ownership and therefore good citizenship.  The truth is "The American Dream" of home ownership doesn't need to be supercharged by the gubment.

Here's why:  Roughly 65% of Americans own their homes, the rest for various reasons rent or live in mama's basement.  Of those who own, approximately half itemize their taxes and take the mortgage interest deduction.  The rest either own their home outright and have no mortgage (and therefore pay no mortgage interest), or are at that point in the life of the mortgage that they are paying mostly principle and very little interest.  For them the standard deduction (short tax form) works best.  That means only about 33% +/- of us actually take the deduction.  The 2/3 of us who don't take the mortgage deduction are subsidizing the 1/3 who are.

It's rigged.  This whole scheme exists primarily to benefit the lenders (bankers).  When they make a mortgage loan, it is front loaded with the interest, the principle paydown (the part that builds your equity) not coming until the final few years of a 30 year (or 15 year) mortgage.  In other words the bank gets their profit up front, then if you pay the loan off early (usually by selling it to someone else who gets a brand new mortgage), they don't care.  In fact they love it....they can start their front loaded money making scheme all over again!

To help them sell this ripoff, Congress years ago (1930's) began actively promoting home ownership via the newly created FHA, necessitating new mortgages.  Cha ching!  (If you don't think it's good to have friends in high place, just look at the bankers!)

Congress isn't offering us a mortgage interest deduction to help us.  (But of course they'll tell us they are.)  They're doing it to help their banker buddies!

My industry, homebuilding, goes all ballistic when anyone suggests the home mortgage interest deduction be eliminated.  "But nobody will ever buy a house again" they squeal.  That's BS.  Up until the 1980's (?) we could write off the interest we paid on credit cards and auto loans, too.  Guess what?  When the IRS phased those deductions out over a number of years, people didn't stop using their credit cards or stop buying new cars.  Not at all!

If we were to, over a decade or so, phase this deduction out it would bring in hundreds of billions of additional dollars to the Treasury every year.  If that money could be used entirely to reduce the national debt and not be siphoned off by Congress to fund other pork projects (like the Social Security Trust Fund was), imagine the effect on our financial stability.  

Imagine how much less the government would have to spend on debt servicing.  Imagine how much our country's credit rating would improve.  Imagine how much lower interest rates would be.  WE WIN!

All of us except the bankers, that is.  That's why this will never happen.  *sigh*

S