The GOP Has a Dumb Mortgage Idea, by Ed Gleser, Commentary, WSJ: ...Today, the Senate Republicans bear the heavy burden of providing the primary check on one-party rule in America. For that reason, it is particularly disappointing to see Senate Minority Leader Mitch McConnell embrace "providing government-backed, 4% fixed mortgages to any credit-worthy borrower" as his alternative to the Barack Obama/Nancy Pelosi stimulus package. ...[T]his idea is bad economics...
We are in the ruins of a housing market made worse by subsidized lending. The government has no business egging people on to borrow as much as possible to bet on housing prices. There is plenty of room to criticize the current stimulus plan, but Republicans need to adopt Ronald Reagan or Dwight D. Eisenhower, not Harold Ickes, as their intellectual role model.
One attractive, Reagan-like alternative to the stimulus package is to focus on a temporary reduction in the payroll tax, particularly for less wealthy Americans who are most likely to spend the money quickly. ... It would be both libertarian and egalitarian.
A second alternative is to be like Ike and embrace public investment in human and physical capital. Republicans could distinguish themselves from their opponents by insisting that investment put national interest ahead of parochial politics. Republicans could insist on cost-benefit analysis and emphasize investments that will make it more likely that the U.S. will remain an economic leader in the world.
Our country needs a robust two-party system, and the Senate Republicans are our best chance for healthy political debate. However, when they abandon economic sense and party tradition for a mortgage plan that will be wildly expensive and ineffective, they do neither their party nor their country any good.
And the good ideas don't end there:
The Senate on Wednesday voted to expand the economic stimulus package with a tax credit for homebuyers of up to $15,000, a provision championed by Republicans as addressing a root cause of the recession.
Like Arnold Kling, I wish to shift the economy out of housing, not into it again. ... So far I say boo to the Republicans. ...