Patrick Smith emailed seeking comment on his plan to use revenue derived from ANWR drilling to pay for the shortfall in Social Security revenue that may or may not exist after the Trust Fund runs out of money in 2042 or 2052 or whever it happens. First off, I don't know that the numbers add up here. Second, I don't think it makes sense to be thinking too hard about revenue sources to be tapped decades in the future. There's just no telling what the situation will be. The libertarian girl wonders why the government should subsidize homeownership. I wonder too. This has never made sense to me. Tom Lee explains how BitTorrent works. I just started using it for the first time today. Most excellent.
January 23, 2005 | Permalink
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I think subsidizing home ownership can be a good thing because of the significant externalities that may result from increased ownership. Think of a public housing project in one of America's inner cities. Why is it so hard to improve the standard of living in these areas? One reason is that if people don't own their own apartment, they care much less about how they treat it, who comes in and out, and how their neighbors' actions impact their property values.
If people own their homes, they could take many positive steps that will improve the quality of the whole neighborhood. If the value of these externalities outweigh the distortions a subsidy creates, it could be a good thing. Interested to hear more of what you think Matt.
Seeding 8 reasonably legal files as we speak. I was the uploader, and have them on a rotational queue. I use a tracker site called "Lokitorrent" that by forbidding pornography keeps some craziness away. They don't enforce share ratios, which is a minus.
Recommend a client called Azureus, but I love watching dials move and numbers.
I don't know if my cable company is going to charge me a premium, cut me off, or send me to jail. They sell you upload capacity on the implicit understanding that you don't use it. Kinda like hardware sellers expecting the rebate forms not to be filled in.
End users have been pushing the IP debate, and with bittorrent, will be pushing the bandwidth debate. Verrrry interesting.
Posted by: bob mcmanus | Jan 23, 2005 9:25:05 PM
Problem with subsidizing home ownership (like so many doofus government progams) is that sooner or later, you buy in to it, and once you are in, you have a vested interest in it continuing. If the subsidy were cut, it's a virtual certainty that home prices would fall, because the cost of owning would go up. Once you have significant money in a house, that looks like a Bad Thing.
It is somewhat similar to the whole starting-stopping-rent-control-mess; anyone who bought property before rent control and sold during is slightly screwed, anyone who buys during and sells after it is stopped get a little free money. There is something to be said for only fixing things when they really need fixing; otherwise, someone is always screwed in the transition.
Posted by: dr2chase | Jan 23, 2005 9:27:29 PM
Before ANWR would have any surplus we must first repay the 30 Billion dollar subsidy Bush would give the oil companies to drill ANWR. We can't expect them to any risk.
As for home ownership, what Ronnie said. It is also a way that Govt further subsidizes retirement.
And although I'm not current, I know when the Reagan admin wanted to end the FHA we all found out it was very profitable and one of the most effecient govt programs.
After refinancing my home over a year ago, I find that I'm paying so much less interest that it's no longer worth itemizing it on my federal income tax. So my wife and I will be taking the standard deduction instead. FYI, we owe less than 100K on our home and the average home in my area now goes for 150K+, but I think that points out the fact that the mortgage interest deduction has never been worth much for those who own less expensive homes. Of course if interest rates ballooned again as they did in the late 1970s, things would be different.
Posted by: David W. | Jan 23, 2005 9:59:39 PM
ANWR money earmarked for SS! What a great idea! Why stop there, though? Let's earmark restaurant taxes for the marines! And how about grapefuit taxes for, uh, oh, uh, cancer research! And MLP taxes for the Dept of Education! Oh, yeh, that's right. MLPs pay no taxes. But, hey, that's great! What ARE the feds doing in education, anyway?
Oh, golly, this is so exciting!
Posted by: ostap | Jan 23, 2005 10:18:28 PM
C'mon, Matt, tax breaks subsidize all sorts of corporate investments, all of which are out of reach of individuals. And wealthy investors don't have to pay as high a tax rate for capital gains, presumably because of the investment risk. Home ownership is an investment that's open to a huge number of working people. It seems to me a good thing.
Posted by: ScrewyRabbit | Jan 23, 2005 10:20:42 PM
"The libertarian girl wonders why the government should subsidize homeownership. I wonder too."
Is this an argument for the collective ownership of property, or an endorsement of a small, wealthy elite owning the vast majority of property in the country, which would likely be the de facto result of ending these subsidies?
Posted by: Green Dem | Jan 23, 2005 10:30:35 PM
Going cold turkey on the mortgage deduction would be murder, but capping it at [. . . does some quick mental math . . .] $10,000 would ensure that it subsidizes only the people--like me--who really need it.
Seriously, I'm a liberal, and I think that, in theory, the mortgage deduction is a bad idea. But once you begin it, dropping it is probably a worse idea. Unless you're going to have a cross-generational suicide pact: killing the mortgage deduction AND eliminating Social Security (but not FICA) for anyone under 30.
Posted by: jlw | Jan 23, 2005 10:44:37 PM
i have had nothing useful to say in two plus years of lurking at MY but hear me now and listen to me later. if you are looking for music torrents look no further than "oink.me.uk." it astounds me daily. look to "easytree.org" for live torrents and "pedros btmusic only tracker" for quality lossless (flac)torrents.
Posted by: annoying pedant | Jan 23, 2005 11:09:56 PM
The libertarian girl wonders why the government should subsidize homeownership.
Jesus Matt, don't encourage her. Your post almost implies that this woman has useful things to say! I thought the whole point of the Libertarian Girl phenomenon was to observe her blog's bizarre dynamic from a distance, as her sycophantic commenters compete for her attention. You're disturbing the delicate ecosystem!
Posted by: anonymous coward | Jan 23, 2005 11:12:55 PM
Not a bad mug shot from Libertarian Girl. Matt, I hope she was at your party. BTW, she's absolutely right about the mortgage interest deduction. But there's no way it will ever be repealed as long as there's an income tax. Debt happy Americans would start a revolution. Also, I've been hearing lots of interesting things about that Bit Torrent stuff. I wonder if anyone can recommend a site where one can, er, learn more about it.
Posted by: P. B. Almeida | Jan 23, 2005 11:17:32 PM
I thought the whole point of the Libertarian Girl phenomenon was to observe her blog's bizarre dynamic from a distance, as her sycophantic commenters compete for her attention. You're disturbing the delicate ecosystem!
You leave out the possibility that Matt's competing for her attention!
BTW, I had never been to her site until just now. It's pretty, um, PINK, I'll say that.
Posted by: ScrewyRabbit | Jan 23, 2005 11:20:37 PM
Only people who do not itemize would ask such a question.
Seriously, I think it's merely indirect application of Keyenesian economics to housing:
Reader's Companion to American History - HOUSING.
During the Great Depression and World War II, federal support of private suburban housing development increased. The income tax deduction for mortgage interest (1939) was a powerful stimulus. Federal mortgage insurance for developers and G.I. mortgages for veterans after the war made purchasing a suburban house cheaper than renting an urban apartment. In addition, automobiles made the suburbs more accessible, and federal funds for road building encouraged low-density development.
Unfortunately, the best site for Bittorent, Suprnova.org, was just shut down about a month ago. It had links to torrents for just about everything. Lokitorrent's good, hopefully some more site's grow up in its place.
Posted by: Mitch | Jan 23, 2005 11:56:37 PM
a new suprnova-type tracker has surfaced at "mininova.org" but the 18 yo that built the original is beta-testing EXEEM which promises a KAZAAlike interface and search. but EXEEM has CYDOOR spyware so there is already a beta EXEEMlite from the crackers. cant say ive used it but i imagine it to be the near future of bittorrent searches.
Posted by: annoying pedant | Jan 24, 2005 8:18:06 AM
someone asked for a torrent info site. check out this wiki.
Posted by: annoying pedant | Jan 24, 2005 8:27:24 AM
two things, annoying pedant
1. great name
2. don't get too excited about Exeem. My suspicion is that it'll actually expose users to greater risk of getting sued. For a laborious technical explanation of why I think this, see here.
And no, I don't have anything better to do than write out lengthy tracts on bittorrent.
thanks for the feedback, tom. im glad you had nothing better to do than keep me informed.
how are people feeling about the ethics of all this? are we forcing change or digital looters?
its hardly a unique question but i dont have anything better to do than stuff my face and then wonder why my pants are tight.
Posted by: annoying pedant | Jan 24, 2005 10:40:14 AM
To provide a 4th or 5th to a bunch of the comments above, while the mortgage deduction might not be a great idea if you were building a tax code from scratch, now that it's there, removing it would amount to a huge one time tax bill of 50+ grand for a large part of the country, in addition to a functional increase in their taxes of $3-5 k or more per year.
It also kills the re-fi business for a generation, which has been one of the big engines that has propped up the economy to the extent it has been the last 3 years. Oh, and you also probably drive a percent or so of the country into bankruptcy when they're forced to move and sell houses that are now worth less than their mortgages.
In addition, all this might also ripple out and further destabilize the already dodgy finances of Sallie Mae and other mortgage companies, and their collapse would make the S&L crisis look like a walk in the park.
If you were looking for ther easiest possible way to do the most combined damage to the US economy and population, repealing the interest tax deduction is a pretty good candidate.
Posted by: Doug Turnbull | Jan 24, 2005 11:12:13 AM
The incentive effects of the morgage deduction on home ownership rates seems pretty flaky to me. Canada doesn't have a morgage deduction and they seem to have pretty good rates of home ownership.
Why would getting rid of the home mortgage deduction cause any great economic hardship to existing homeowners, as long as it is done slowly?
Try this on for size: Congress passes a bill saying that starting 5 or even 10 years from now, the mortgage deduction would be phased out over a ten-year period. The delay before starting the phase-out would prevent a sudden readjustment in home prices -- on average, mortgages don't last must longer than 10 years anyhow, and for those that do, the mortage payments will be mostly principal by the time the mortgage deduction is fully phased out. It would give the market plenty of time to figure out just what effect the loss of the mortgage deduction would have both on home prices and on mortgage interest rates and terms.(*)
This biggest problem with this is that under our political system, the impending phaseout would be a ripe target for real estate and finance lobbyists who'd like to see it repealed.
But even I as a homeowner would have no problem with such a law: even though it would reduce what I would get for my house if I sell it 15 years from now, it would barely affect what I would get if I sold it today or how much deduction I get from my mortgage interest.
You might have to fiddle with this a bit -- maybe a 15 year delay followed by a 5 year phaseout would be better. Or maybe 5 and 5 would be enough. But the basic principle is sound: moving the consequences into the future would prevent the dire economic consequences mentioned by commenters above, while the knowledge of the coming change would allow the marketplace to begin its adjustments today.
(*) A lender might capitalize on the phase-out by creating tax-advantaged mortgages which have high interest rates early on in exchange for lower interest rates later in the term of the loan, when the interest will no longer be fully deductible. A loan like this is great for the lender, who will get more money early and may not even have to endure the low interest rate later, if the owner sells before the mortgage is up.)
Posted by: Alex R | Jan 24, 2005 1:32:13 PM
In areas of high housing demand, the mortgage interest deduction is a wash.
ie. when submitting an offer for a house one just factors in the interest deduction and looks for that much house.
The end result is just a higher mortgage payment with offsetting interest deduction. The only winner is the bank, and the brokers who get their % commission.
Posted by: Troy | Jan 24, 2005 2:02:22 PM
Is jlw still here ? I tried to send a mail concerning oink etc. but it came back as undeliverable
Posted by: merula | Aug 24, 2005 3:24:12 AM
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