$15,000 Tax Credit: Where Has The Senate Been For The Past Year?

If this is what the new bipartisanship is going to look like, then this is change we won't want to believe in.

So we've spent at least a year in recession due largely to a popped housing bubble. This bubble inflated in part because of a long line of government policies to push people into homeownership (see economist Edward Glaeser's recent piece in The New Republic for just one good account of that process.)

So now we want yet another artificial incentive for homeownership in the form of a tax break.  What will this do to alleviate our economic woes? Relatively wealthy people who can already afford to buy a house or are close to that point will reap the benefits of this tax break, not the people hardest hit by this crisis. I'll let Tyler Cowen explain the economics behind why this does not remotely address the root cause of the current crisis.

But more troubling, this move suggests that Congress has not learned anything from the housing bubble. They are falling back on the old mantra that helped get us into this mess: promote homeownership at all costs, now and forever.

One tax break idea that, while no panacea, would potentially do more good and not repeat the mistakes of the past, is a payroll tax holiday. The NFIB has more on that topic.