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Excellent Use of the Word Boondoggle

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May 13, 2011 – Comments (5)

Tweeted in from SmartMoney:

http://www.smartmoney.com/spend/real-estate/report-the-housing-crash-is-getting-worse-1305234613824/?zone=intromessage

What a foolish boondoggle those tax breaks for home buyers have turned out to be. The government spent an estimated $22 billion between 2008 and 2010 on tax breaks to prop up the housing market. All it achieved was a brief suckers' rally that ended last summer.

"As we said at the time, it was a giant waste of money," says Mark Calabria, economist at the conservative Cato Institute. "None of these things really turned the housing market around. They just put off the adjustment for awhile."

Foolishly,

Jason

5 Comments – Post Your Own

#1) On May 13, 2011 at 4:15 PM, ikkyu2 (99.26) wrote:

Well, that 'boondoggle' put me in a house, where I'm happily living, and I don't know that I could have afforded it without the tax credit.  Of note, the sellers were not going to sell any cheaper than they did; they almost decided to take their house off the market instead of selling it to me, and a few other homes I was looking at got taken off the market shortly after the credits expired.

Of course, there was no benefit from this 'boondoggle' to Mark Calabria, economist at the conservative Cato Institute, nor to the super-wealthy investment bankers who pay his salary. 

We really need to take into account that benefits that accrue to any other segment of society than Wall Street are probably evil and should be done away with, and I am happy that TMFJMo, Mr Calabria, and the Cato Institute see fit to remind me of this important fact every day.

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#2) On May 13, 2011 at 4:26 PM, rd80 (98.07) wrote:

Here's a similar story saying the tax credit cost buyers more than the $8k they got in credits.

"The government's recent $8,000 cash incentive for first-time home buyers has proved even more costly for recipients than for taxpayers, according to data released Monday. Typical buyers have lost twice as much to price declines as they received from the program."

Too bad we can't dock the pay and personal assets of every congress critter who voted for the boondoggle to recover the $22 billion tossed down a rat hole.

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#3) On May 13, 2011 at 8:41 PM, dbjella (< 20) wrote:

 ikkyu2

your welcome. 

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#4) On May 13, 2011 at 9:10 PM, TMFJMo (70.84) wrote:

We really need to take into account that benefits that accrue to any other segment of society than Wall Street are probably evil and should be done away with, and I am happy that TMFJMo, Mr Calabria, and the Cato Institute see fit to remind me of this important fact every day.

Wow...while I do believe that this tax credit was a waste, I certainly don't see your benefit as "evil" so please don't put those words in my mouth. That's great you got a house out of the deal. I am sure you will be a responsible homeowner. However many will not be. The government has this "mission" to create a nation full of homeowners. And while that may seem great and all, the fact of the matter is that once many get knee-deep in it, they realize that the "dream" of owning a home may not be the dream they were hoping for.

I'm certain that you don't believe that this tax credit comes free. It is simply a loan and will be collected from you at a later date in the form of property tax or something to that effect. The point is that there is no free lunch. We all know it. I mean let's take this thing back to its source: the banks who underwrote the loans (and de facto the Federal government for backing said loans) on houses that were nowhere close to the values being bid. So at some point somewhere somebody's gotta pay the piper. And unfortunately it has been dragged out to the "n"th degree with no real end in sight still. Such is the nature of capitalism. You get the ups and downs...things get worse then they get better. It's a tough cycle, it isn't always easy, but it's a hell of a lot better than any of the alternatives by a long shot.

Again, let me reiterate that I am genuinely happy that you were able to buy a home from this. As a homeowner myself I know the pride and satisfaction of having a place to call your own. I was really just riffing on the word boondoggle.

Foolish regards,

Jason (TMFJMo)

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#5) On May 13, 2011 at 9:29 PM, rd80 (98.07) wrote:

ikkyu2,

I'm glad the credit worked out for you and I'm sure there are a lot of other happy buyers, but on the whole the two articles point towards the program being a failure.

The program was supposed to stabilze home prices - it hasn't, they're still trending down.

If the article I linked is correct, many of the buyers who bought because of the credit would have been much better off had they waited before buying.

Anyway, I'm glad to hear that only $21,999,992,000 was wasted. :)

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