As I predicted Real Clear Markets wastes no time trotting out another libertarian to attack your mortgage interest deduction, this time from the Manhattan Institute

Your mortgage interest deduction is only eighth in the latest list of top things on which government claims it loses revenue

But libertarians especially hate it. Expect more articles telling you it's got to go as tax reform talk heats up in Congress.

Here are the top 20 "tax loss expenditures" for 2016-2020:

1.  Exclusion of employer contributions for health care and insurance: $863 billion

2.  Lower tax rates on dividends and long term capital gains: $678 billion

3.  Income made by controlled foreign corporations: $587 billion

4.  Contributions made to IRAs and 401k plans: $584 billion

5.  Pension plan contributions: $424 billion

6.  Earned Income Tax Credit: $373 billion

7.  Deductions taken for state and local income taxes, sales taxes, property taxes: $369 billion

8.  Deductions taken for mortgage interest on owner occupied homes: $357 billion

9.  Obamacare "subsidies": $327 billion (what a laugh: they raise the cost, give you a subsidy, and count the subsidy as a tax-free gift)

10. Child tax credit: $271 billion

11. Expensing depreciable business property: $248 billion

12. Deductions taken for charitable contributions: $231 billion

13. Social Security benefits: $214 billion

14. Municipal bond income: $195 billion

15. Deductions taken for taxes on real property: $180 billion

16. Capital gains taxes excluded at death: $179 billion

17. Medical expenses and over the counter medications under cafeteria plans: $169 billion

18. Capital gains taxes excluded on sale of principal residence: $166 billion

19. Life insurance proceeds: $128 billion

20. Deduction for income from domestic production activities: $102 billion.

Total revenue the government claims it's "losing" because of its "benevolent" tax policy on these items: $6.645 trillion over five years, or $1.329 trillion annually.

My, how nice of them. 

New York Times blames housing unaffordability on mortgage interest deduction, never mentions how the Fed just reinflated the housing bubble quite apart from it

Here.

Housing was on its way to being affordable again until the Feds stepped in to stop foreclosures from rising and prices from falling, late in 2008. As a result of rock bottom interest rates which existing owners used to refinance their mortgages, housing is now more expensive than it has ever been, but the Times attacks the mortgage interest deduction for causing the problem.

Prices are up 47% since the 2009 low, in just eight years! The mortgage interest deduction was invented over 100 years ago, and helped to build the post-war middle class.

The Times seems bent on further destroying it.

"Middle class" according to Pew Research Center is just trying to make everyone feel better

MarketWatch here says that Pew estimates middle class household income for a family of 3 at between about $35,000 and $105,000 for 2011.

To understand how too liberally defined that is, consider that in 2011 almost 60% of individual wage earners made $35,000 or less . . . about 91 million wage earners out of 151 million.

Actually the middle third of all those paycheck earners, 50 million, made between just $15,000 annually and not quite $40,000, the average of which is about $27,500. Make over $40,000 and you were already in the top third of individual wage earners that year.

A couple making $27,500 can survive in this world, but it wouldn't have been able to buy the median priced home of $225,000 in 2011. Just financing that without a down payment, an impossibility, at the average 30-year rate of 4.5% in 2011 would have meant 50% of income going to principal and interest.

Putting 10% down would drop that to 45% of income, still hardly affordable. And who do you know making $27,500 with $22,000 saved for a down payment on a house?

They'd be renting, most likely, and not yet solidly middle class.

In 2016 the average median sales price of a home in the US soared to nearly $314,000, putting the American dream even farther out of reach than ever before for the majority.

And right now the boob Rush Limbaugh is ranting against homeownership and its tax deduction

Rush says the mortgage industry lobbied to get the mortgage interest deduction, not realizing it's been there since the Income Tax became law in 1913.

It's like a conspiracy, this coordinated attack on homeownership today.

University of Georgia historian minimizes the magnitude of foreclosures during the Great Depression, missing their significance for the value of homeownership today

Stephen Mihm, at Bloomberg here:

While home ownership became increasingly popular in the early twentieth century, the U.S. was still a majority-renter nation in 1930, though by this time homeowners numbered 48 percent of the total population. But the Great Depression knocked that figure back down to 43 percent, roughly on par with late nineteenth century levels.

Things changed dramatically in the 1940s, when home ownership levels began moving toward unprecedented highs, hitting 66 percent by 1980. Economists are still arguing over why that happened, but the most compelling explanations are pretty banal and do little to support the sentimental blather associated with home ownership.

Does this guy even know that the nonfarm foreclosure rate nearly quadrupled between 1926 and 1933?

Through 1933 there were over 1 million completed foreclosures, about 1% of US population of the time. Compare that to the current crisis. We've had 8.5 million completed foreclosures since 2004, about 2.5% of population. 

Homeownership as a cultural value in the post-war was so high because so many people lost their homes before it.

And it still is today and will continue to be, despite what some people say with an axe to grind from the safety of their sinecures.

Newsflash for those of you who think Trump's talk of an inherited mess is silly

You obviously had full-time work under Obama. We didn't for almost eight years, and not even part-time work for five. Our best money-saving work years are now all lost.

You obviously enjoyed the stock market recovery and even continued to invest, but we had to sell assets to preserve them and liquidate some just to survive.

Now we're stuck with non-income producing investments thanks to Ben and Janet and a stock market which is too expensive for a sane person to buy.

You obviously refinanced your mortgage at rock bottom rates, but we couldn't without that full-time job. And now that we can, it's hardly worth the expense thanks to Elizabeth Warren and her CFPB.

Meanwhile the gutters leak, the driveway needs paving, and the snowblower needs an overhaul.

You obviously drive on fresh wheels, but our cars are 10 and 20 years old in 2017. We'll probably keep them another ten because our mechanic is an honest Christian.

You obviously feel entitled to vacations and take them regularly, but we haven't had a real one since the 1990s.

You obviously enjoy dining out at restaurants, but we shop for bargains and cook at home almost every night.

You obviously consume healthcare like you do jet fuel, but we only go to a doctor, dentist, ENT or ophthalmologist when we absolutely have to because it's all out of pocket because of ObamaCare.

At Christmas we mostly give each other necessities, like new shirts socks and underwear, just so we have plenty of things to open to make the holiday seem more festive than it is.

We don't have television service because it's a costly waste of time, but for entertainment we enjoy listenting to Donald Trump on the radio dressing you down.

He's the best thing that's happened to us in years.

In correcting the fallible bureaucrats Kyle Smith also gets the homeownership rate wrong: It's as low as in 1965

Here:

And 80 percent of [bureaucrats] guessed that the rate of home ownership is lower than it is: 67 percent. With all of this underestimating going on, it’s not surprising that Washington is constantly pushing urgent, potentially disastrous fixes (such as re-inflating the housing bubble by encouraging more and more Americans with sketchy credit ratings to buy homes) for imaginary ills. Renting your home is a perfectly acceptable way to live, and Fannie Mae shouldn’t be in the business of enticing renters of modest income to commit to large amounts of debt by obtaining mortgages.

If the Fed can buy $4 trillion in shitty mortgages and Treasuries, it can buy $1 trillion in student loan debt

Just sayin'.

Commenter explains Donald Trump to oblivious Marxist at CBS News MoneyWatch who appeals to Richard Hofstadter's passé paranoid style

Here:

IHATEUSERNAMESLIKETHIS April 21, 2016 6:6AM

It's not class resentment.

First you destroyed the way we funded our homes and communities -- the Savings and Loans.

Then you destroyed the ways we collectively bargained -- the unions.

Then you stole the [principal] of the Social Security Trust fund, some 2.7 trillion dollars so it couldn't earn interest and started to act like it was a handout you were giving us.

Then you shipped all the manufacturing jobs to China.

Then you shipped the service jobs to India.

Then you "commoditized" the mortgages on our homes in violation of the long standing "statute of frauds" and put them on the big roulette wheel you call Wall Street.

Then when that scheme failed you bailed out the banks that came up with the fraud and stuck us with the bill to bail them out.

Then you ran the money printing press so fast, so the big roulette wheel could prosper while the rest of us found our money buying less and less.

That is not called class resentment. That is called waking up.

P. J. O'Rourke explains why trouble making the mortgage, plundering a retirement account and buying stuff he can't afford all qualify Marco Rubio to be president

Here:

"Rubio owns houses that he has trouble paying for. We, the American people, own two houses (of Congress) and the White House that we have trouble paying for.

"Rubio emptied his retirement account to meet current expenses. This is exactly the way Social Security works.

"Rubio bought a boat he couldn’t afford. The U.S. Navy does so all the time.

"When it comes to dealing with the federal budget, Rubio has the kind of experience that counts."

Trump's tax plan released to the public today is ambitious and pro-growth

The Trump tax plan can be reviewed here.

Notable features include exemption from federal income taxation entirely for up to about 73 million households who make up to either $25,000 individually or $50,000 jointly.

This is in the spirit of the original income tax law, which for its first few years, that is until the demands of World War I and the bureaucratic state came into play, taxed the incomes of no one except the very wealthiest.

It is unclear whether the plan retains the child tax credit or the earned income tax credit, two programs which effectively transfer welfare to lower income families who pay no income tax anyway and who receive through these two vehicles what is effectively a rebate of Social Security taxes they pay as employees, eliminating its regressivity.

For the rest there are just three tax brackets of 10%, 20% and 25%, kicking in at joint incomes up to $100K, up to $300K and beyond $300K. Presumably, but not stated, short term capital gains are taxed at these ordinary rates. Long term capital gains tax rates are 0% up to $100K of joint income, then 15% and 20% up to $300K and beyond $300K of joint income.

Business taxes are slashed to 15% no matter the size, which is YUGE for American competitiveness.

The AMT is eliminated entirely, along with the marriage penalty and . . . the death tax. It's going to be unbelievable!

Deductions are capped for the richest Americans, but deductions for charity and mortgage interest are retained.

We'll see what the dynamic scorers will have to say about it for revenues, as time goes by.

Hillary's latest whopper: "I called for cracking down on subprime mortgages"

Yea, the ones who under her husband exploded in number by over 800% between 1993 and 1998.

From the story here:

"I was alarmed by this gathering storm and called for addressing the risks of derivatives, cracking down on subprime mortgages and improving financial oversight," she added.

A healthy housing market would have 1-2% underwater, but we still have 15% with negative equity

Mostly in the lowest third of valuation.

From the Bloomberg story, here:

"A decade after U.S. home sales peaked, 15.4 percent of owners in the first quarter owed more on their mortgages than their properties were worth, according to a report Friday by Zillow Inc. While that’s down from a high of 31.4 percent in 2012, it’s still alarmingly above the 1 or 2 percent that marks a healthy market, said [Stan] Humphries, the chief economist at the Seattle-based real-estate data provider. Worse yet: The pace of healing is losing steam. ... While 25.5 percent of homes valued in the lowest third are underwater, just 14.1 percent of those in the middle have negative equity. For the top group, the figure is even lower -- 8.3 percent."

Underwater mortgages still number 8 million, down from 25.5 million in 2011

From the story here:

"Nearly eight million borrowers, or 15.4 percent of homeowners with a mortgage, still owe more than their homes are worth, according to Zillow. While the numbers continue to improve, about half of those borrowers owe the bank at least 20 percent more than their homes are worth."

Gretchen Morgenson smells a rat: Fannie/Freddie bailout cost us nearly $188 billion, but Treasury rakes in the profits

Gretchen Morgenson for The New York Times, here:

For decades, the companies had maintained that their mortgage operations posed no risk to taxpayers; their pals in Congress echoed this refrain. But then came the mortgage debacle, and taxpayers had to shore up the companies with $187.5 billion. Initially, Fannie and Freddie had to pay interest on the loan. But in August 2012, the Treasury and F.H.F.A. abruptly changed the agreement; under the so-called third amendment, the government began sweeping all the companies’ profits into the Treasury. Since then, Fannie and Freddie have been immensely profitable. As of last December, the Treasury had received a total of $225.4 billion from the companies. ... 

The initial $187.5 billion loan remains outstanding, however, because of the deal’s structure. ...

But recall what was going on in mid-2012. The presidential election was in full swing, and Democrats and Republicans were clashing over the debt ceiling. That May, in a shock to many, Fannie and Freddie reported profits from their operations for the first time since the mortgage crisis. The amount: $4.5 billion. And plenty more was to come. Certainly, giving the Treasury access to billions of dollars in the companies’ profits during this time provided financial flexibility to the executive branch that Congress might not otherwise have approved.

The housing bubble was mainly a middle class and higher phenomenon, not of the poor

From Robert Samuelson, here:

". . . in poorer neighborhoods . . . the actual borrowers . . . were much richer than average residents. In 2002, home buyers in these poor neighborhoods had average incomes of $63,000, double the neighborhoods' average of $31,000. ...

"In 2002, the mortgage-debt-to-income ratio of the poorest borrowers was 2; in 2006, it was still 2. ... 

"[T]he bulk of mortgage lending and losses [during the housing bubble] - measured by dollar volume - occurred among middle-class and high-income borrowers. In 2006, the wealthiest 40 percent of borrowers represented 55 percent of new loans and nearly 60 percent of delinquencies (defined as payments at least 90 days overdue) in the next three years."

Despite big declines, completed foreclosures in October 2014 are still running 95% above normal

So says Corelogic here.

Completed foreclosures in October 2014 came to 41,000 nationally, 20,000 higher than the 2000-2006 average of 21,000 per month. Still, the level represents a big drop over the past year and is part of a consistent decline in houses reaching completed foreclosure going back 36 months.

4.2% of all mortgages were in serious delinquency in October.

FL, MI, TX, CA and GA alone accounted for 256,000 of 561,000 completed foreclosures in all states in the last twelve months, almost 46% of the total.

Michigan is still tops among non-judicial states in October for completed foreclosures in the last twelve months: 45,000.

Florida is tops in judicial states in the last 12 months: 118,000 completed foreclosures.

The half million plus completed foreclosures in the last twelve months represents the lowest level since October 2007 according to Corelogic. The relatively few additions since the September report mean that completed foreclosures since 2008 continue to hover around the 5.2 million level.

All figures are rounded.

There's the poverty level, and then there's "the working poor": United Way releases ALICE data

Key to ALICE calculations is assessing when more than a third of income goes to rent/housing, which usually happens when a good job goes away and is replaced by a lower-paying one, making the mortgage or the rent suddenly unaffordable. Rents have risen and become less affordable at the same time as the housing market has recovered from the 2011 lows. In the summer it was reported here that 52% of Americans have had trouble in the last three years covering either the rent or the mortgage. 

The Florida data is discussed here, where fully 45% of the households are in rough shape:

While 15 percent of Florida households are below the poverty level, another 30 percent are financially insecure — a figure that also applies to Sarasota and Manatee counties — based on a new measurement developed by the United Way. ... Florida's large number of financially fragile households is rooted in a number of economic trends, including housing affordability and other cost-of-living concerns. But the main driver is the dearth of middle-class jobs.

The Connecticut data is discussed here, where 35% of the households are struggling:

In Connecticut, the new report said, 10 percent of all households fall under the poverty level, and 25 percent are between the poverty level and the ALICE [asset-limited, income-constrained, employed] threshold. ... Similar ALICE reports have been done in a limited number of other states by their United Way organizations. Northern New Jersey was the first to shine a light on the ALICE population, and this year, for the first time, Connecticut, California, Florida, Indiana and Michigan United Ways have commissioned their own studies. Connecticut has the lowest proportion of residents below the federal poverty level and the lowest combined total in the ALICE category and below the poverty line of any of the states.

America's engine of credit creation, housing, is still flat on its back despite recovery from the bottom

America's engine of credit creation, new housing starts, is still flat on its back despite a recovery from the bottom. The fact of the matter is, we have recovered TO the historic lows, that is all, to 955,000 annualized through the first half of 2014.

The total level of mortgage liability, a key component of total credit market debt outstanding, the growth of which has hit the wall, has been in steady decline over the period as well. Since 2008 it has declined from peak level at $10.7 trillion then to $9.4 trillion today, down over 12%. In the prior 6 year period, by contrast, total mortgage liability level increased 90% during the so-called housing bubble, and for the 6 year period prior to that 60%.