NRO’s eye on debt and deficits . . . by Kevin D. Williamson.

This Is Not the Tax Cut You’re Looking For


Number of responsible people in the U.S. House of Representatives today: five. The Committee to Reinflate the Bubble is in the house!

With the deadline looming, the House passed 409-5 a bill to give homebuyers an extra three months to take advantage of a federal tax credit. 

Homebuyers who qualified for the credit would have until September 30 — instead of June 30 — to close on their purchases. The tax credit, which required buyers to sign a contract on a home by April 30, provides homebuyers with a tax write-off of as much as $8,000.

The legislation is fully offset. 

Well, hooray for the offsets. They are wonderful and all, but the real problem here is that Washington is acting in a coordinated fashion—409-5!—to repeat the inflationary housing-price policies that kicked off the financial crisis and got us into our present economic straits. Brilliant thinking, geniuses. How about running with some scissors while you’re at it?

As MC Hayek put it, “The place you should study isn’t the bust / It’s the boom that should make you feel leery, that’s the thrust / Of my theory.” The housing boom was the problem, not the fact that it couldn’t last forever. Artificially high housing prices, like any other artificially high price, will come back down, and they will tear a nice wide path of destruction through the economy as they do so. Artificially high housing prices also produce a phony “wealth effect,” encouraging private households to borrow and consume beyond their means, i.e., to act like the government. Washington’s inflation of housing prices is, basically, the root of all evil. So, knock it off, Congress.


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