The Committee to Reinflate the Bubble — the National Association of Realtors, the builders’ lobby, and the rest of the gang committed to using government policy to artificially increase real estate prices, enriching themselves while undermining the economy and imperiling the nation — is now the Committee to Increase the Deficit. The Simpson-Bowles panel has released its deficit-reduction report, and, to nobody’s great surprise, the proposal to reduce bubblicious tax subsidies for homeowners has drawn a pledge of resistance from the most self-interested parties. Reports the WSJ:
Joe Stanton, chief lobbyist for the National Association of Home Builders, said his organization would use “the full weight of our grass roots” to prevent any reduction of the mortgage-deduction tax break. “You are already talking about an industry that is completely battered, and this will kill us,” he said.
If your industry cannot survive without special benefits from the government, then it deserves to die, whether you’re an ethanol huckster or the National Association of Home Builders. Never mind that Mr. Stanton is totally full of beans — lots of builders will survive, and houses will continue to be built, when it makes economic sense to do so — but consider this: During the boom, Stanton’s crew got rich in part because of government policies that artificially drove up the price of houses and the incidence of homeownership. Nobody profited from the housing bubble like the builders — ask Bruce Toll. It being inescapable that unsustainable trends will not be sustained, the builders now are suffering from the results of the very same policies that once padded their profits, and they are willing to sacrifice the good of the nation, which is critically threatened by our enormous deficits, for their own narrow financial self-interest. So much for Ask not what your country can do for you . . . .
In public-choice theory, these kinds of problems are described as concentrated benefits vs. dispersed costs. The nation’s need to reduce the deficit is real and it is acute, but it is also general and diffused. A deficit-reduction measure that costs 1 million people $1 million will get nobody’s attention, but if the same program costs one person $1 million, he’ll pay very close attention, indeed. The Committee to Reinflate the Bubble has a very concentrated interest in doing everything possible — including irresponsible, economically destructive things that are bad for the country and impoverish their neighbors — to keep housing prices artificially high. People with concentrated interests will dedicate a lot of capital and energy to politics, so they are apt to get their way, and they generally don’t give a fig about the consequences for anybody else.
That, to me, is the real case for limited government. I’m a sucker for misty talk about our ancient liberties, at least as much as the next conservative, but set aside the philosophical ruminations and bear this in mind: Every time the government does something — anything – some apple-stealing miscreant will find a way to use that to rip off his neighbors. That is what the National Association of Home Builders is promising to do here: to fight necessary fiscal reforms to ensure that the price is paid by anybody but the very people who profited from the bubble in the first place. And they don’t even have the decency to be ashamed of themselves.
That’s just one little example in one little panel, the recommendations of which probably will be ignored, anyway. But it is an epidemic — and it’s a big part of the reason we’re in this debt mess to begin with.
– Kevin D. Williamson is deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, to be published in January.