When the big tax credit for home purchases drew near its end date in November, Congress got panicky. Lawmakers wondered whether, without the $8,000 credit, Americans would buy what politicians considered to be “enough” homes to help our economy get on track, or whether purchases would drop further.
So they enacted a new law extending the credit through next April 30. Lawmakers didn’t feel they could “trust” consumers enough to let them buy or sell homes according to their needs and financial ability, without special incentives provided by taxpayers — the vast majority of whom are helping pay for the incentives but will not benefit from them. Congress assumed it was more capable than the free market at deciding how many homes ought to be bought and sold. It would “guide” the market on our behalf.
So what did we get for all that spending of taxpayer dollars to give a windfall to a comparative handful of home buyers? Well, in November, sales of new homes plummeted 11 percent — even with the big tax credit still firmly in place. It seems consumers have their own priorities and their own reasons for buying or not buying a home at a particular time.
Congress has only muddied the waters and increased our crippling deficits with its efforts to manipulate the free market. Unfortunately, many in Congress think the ongoing recession and high unemployment are results not of too much intervention by Washington but of too little. We’re all paying a price for that mistaken notion.