“People account for it when they think about how much house they could afford to buy. You take that away, and house prices are going to weaken. They are going to decline.”
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If the GOP agrees to limit or do away with the mortgage interest or charitable deduction, it deserves the battering it will take at the polls. Houses prices will immediately fall as the value of the deduction is built into the price of every home in America, and the very weak housing sector would suffer a terrible blow and lead the way back into recession. Limiting charitable deductions strikes at employment in the not-for-profit sector, the world of higher ed, and of course every church in America.
There are plenty of tax reforms available, but limits on these two, as well as the deduction for state taxes, are the ones most likely to inflict enormous economic damage on the country and political damage to the GOP. of course the president will push for them because he lost the middle class and upper middle class vote, and thus isn’t looking out for the interests of these voters.
But the GOP backing them? Insane. Just insane.
The backlash against any such “deal” is as predictable as it will be ferocious. Only a clueless Beltway political class advised by academics and think-tankers could imagine such a deal would be good for the country or acceptable to conservatives.
Count on it happening.