Nov
6
Is Congress Creating Another Housing Bubble?
Though the deeply divided Congress can’t seem to agree on much these days, the House and the Senate did manage to come together this week, with nearly unanimous votes, to extend an $8,000 first-time homebuyer tax credit. But among economists of various political persuasions there’s widespread agreement on the Obama-backed bill: it’s horrible policy that could wind up prolonging, if not worsening, the housing crisis.
So why is a policy that diverse experts think is a bad idea so popular in Washington?
“Never underestimate the massive amount of political pull that the real estate industry and the homebuilders have,” Calabria says. The real estate industry gave $136 million to federal candidates during the 2008 election cycle, putting it fourth overall in terms of campaign contributions. The industry also spent nearly $750 million lobbying the federal government over the past two decades, $81 million of that in 2008 alone.
