Posts Tagged ‘Tax Rebates’

$26 Billion Failed To Stop Housing Market Decline

In Economy, Housing Bubble, Obama Administration, Tax Breaks on November 13, 2011 at 12:23 am

I recommend a Marketwatch story, , which follows up on the home purchase tax credit “Stimulus” programs of the Obama Administration.

We are reminded about the $8,000 tax credits that were mailed out to home buyers in 2009 and 2010.  Using recent data, we see most of these home buyers are worse off, even with the credit, because of the continued slide in home values.  That is sobering: the government spent $26 billion on home buyer subsidies and the average qualifying buyer made a losing bet even with the government money.  The average home dropped by more than $14,500 since the time of the tax credit, which more than offsets the $8,000 tax credit.  Needless to say, the taxpayer is worse off, too.

The graph below demonstrates this.  The tax credits helped cause a temporary halt of the decline in 2009 as home prices briefly increased.  Then home values went back to their decline after the credit ended in June 2010.  The real estate market had not yet cleared.  All that government money only delayed the inevitable, actually extending the housing recession by pushing back the time when housing would hit its trough. 



Graph from Wikipedia Commons, retrieved 11/12/11,

Picture from Wikipedia Commons.

Quiz: What’s This NYT Stimulus Editorial About?

In New York Times, Political Rhetoric on August 12, 2011 at 12:45 am

Guess what this editorial is about:

“An Effective, Responsible Stimulus” by the New York Times:

“[The President] got more specific yesterday about what he wants to do to help the economy… It was a promising start, and the administration should now start working with Congress to deliver a stimulus package as quickly as possible.”

“Under the president’s plan, the total stimulus would amount to 1 percent of gross domestic product, enough to give the economy a good shot in the arm. But its effectiveness will depend on how the relief is delivered….”

“To help businesses the president suggested a range of tax breaks, including temporary tax credits for new investment, accelerated write-offs for spending on buildings and equipment, and a cut in the corporate income tax. The first of these is the best, since it would directly encourage companies to start spending. Accelerated write-offs are less precisely targeted. They would cut the cost of existing assets as well as new ones, and companies’ savings might or might not be used for growth. Of least use is a cut in the corporate income tax, which would have little if any effect on businesses’ decisions on investment and employment.”

“To help consumers, the president suggested extending the duration of cash benefits and health coverage for the unemployed, more tax rebates and accelerating his existing 10-year package of tax cuts. Extending unemployment benefits is important…”

“Tax rebates would certainly give consumers a boost, especially if the rebates went to lower-income Americans whose purchases are most constrained by their earnings.” [1]

What was your guess?  Did you think it was a January 2009 editorial in support of President Obama’s Stimulus plan? 

The answer is it was an October 4, 2001 editorial in support of… President Bush’s Stimulus plan. 

A portrait shot of a smiling older male looking straight ahead. He has short gray hair, and is wearing a dark navy blazer with a blue styled tie over a white collared shirt. In the background is an American flag hanging from a flagpole.


Pictures from Wikipedia commons.