In its latest bit of aggression against economic sense, the Biden administration has come out in favor of “progressive” interest rates for home buyers. Those who have good credit will have to pay more in order to subsidize buyers who have poor credit. To Biden and his fellow statists at the Federal Housing Finance Agency, this is a great idea: Since we have “progressive” income taxes to make wealthier people pay more for government, why not also make people who are lower credit risks pay more when they take out a mortgage? But rather than making people with higher incomes pay more, Biden would force those with better credit to pay more.
In this AIER essay, Charles Baird attacks both the morality and the wisdom of Biden’s plan.
He writes:
Some commentators have questioned the FHFA rule’s incentive effects, but no one seems to have questioned its legitimacy. What is the underlying principle that justifies such a facially discriminatory policy? I think the lack of concern about legitimacy is due to the fact that almost all commentators, even economists, have, for far too long, uncritically accepted the legitimacy of progressive income tax rates.
Right. “Progressive” taxation has become a sacred cow, and the statists want to expand it to interest rates. (And in California, they want your utility bills to be based on your income.)
I would also question its legitimacy on constitutional grounds. Congress is vested with all legislative authority. This is a diktat from a bureaucracy. Bureaucrats aren’t empowered to make policy. If Congress wants to do something as ridiculous as this, let it.