Just when you hope the Republican politicians understand the urgent need to resist more wasteful spending, they lead the charge to put more money into the most inflated part of the economy, the housing market.
Seeking to jump-start the housing market, the Senate added new tax relief for homebuyers to its $900 billion economic stimulus bill yesterday as the legislation moved toward a final vote.
The amendment, offered by Sen. Johnny Isakson (R-Ga.), represents a significant victory for Republicans. GOP lawmakers have complained that the package includes few of their priorities for easing the economic crisis, including more help for the housing sector, which has been devastated by foreclosures and the frozen credit market.
The Isakson provision would offer a tax credit of up to $15,000 for any home bought as a primary residence, for one year after the stimulus bill is signed into law. It would add $19 billion to the plan.
The best that can be said is that this isn’t as stupid or costly as Sen. Mitch McConnell’s proposal for Uncle Sam to hand out a four percent mortgage to anyone who wants–which would have run a couple hundred billion dollars annually–and Sen. John McCain’s truly nutty, and even more expensive, idea for the federal government to buy up every bad mortgage in America at face value.
The housing market bubble burst. It cannot be reinflated. The bust will be painful, but dumping more money into the market in an attempt to inflate prices will only slow the adjustment process. The pain is unfortunate, even tragic for some people, but inevitable.
