Congressman Ron Paul has become a hero to many a limited-government conservative for his unalloyed libertarianism in foreign policy and monetary policy. Unfortunately, he has a habit of going off the rails and into big-government land when the subject shifts to microeconomics (such as his support for government price controls in prescription drug markets).
Today, he once again exposed his microeconomic weakness, this time in the highly sensitive housing market (MoneyNews):
Rep. Ron Paul, R-Tex., who is usually opposed to government intervention in the economy, has introduced legislation to permanently extend the first-time homebuyer tax credit and to make the credit available to people whose homes have been destroyed by a natural disaster, such as a hurricane.
“It is hard to think of a more beneficial or compassionate expansion of the first-time homebuyer tax credit than to make the credit available to those whose homes have been destroyed or damaged by natural disasters,” Paul says.
Honestly, I’m not sure what’s worse here: Dr. Paul’s determination to reflate the housing bubble, his willingness to intervene in the insurance markets by creating a new moral hazard (insurance firms will be less stringent in property and casualty markets if they know the Feds will kick in with a tax credit for their clients every time), and his resorting to the bubble-gum verbiage so prominent on the left. If “compassionate” wasn’t enough to alarm you, dear reader, try this (same link):
“In addition, the changes to the casualty loss provision will help more taxpayers affected by natural disasters,” he says. “Providing tax relief to first-time homebuyers and to those affected by natural disasters should be one of Congress’ top priorities.”
Say what?
What happened to scaling back government’s increasing grip on the nation’s economy? Reducing the number of market perversions caused by the “invisible foot” (Dick Armey’s term)?
Finally, there is this little doozy (same link again):
If passed, the proposed legislation would also help people who have lost their jobs because of a natural disaster by making unemployment payments provided under the Disaster Relief and Emergency Assistance Act tax-free.
Why are “people who lost their jobs because of a natural disaster” suddenly worthy of a tax break tacked on to a supposed housing measure? For that, one needs to remember that Paul’s district has more Gulf of Mexico coastline than any other in Texas (map, Paul’s District is #14).
In other words, Ron Paul, the vaunted “Dr. No,” is hoping the rest of us will say “yes” to a new moral hazard in insurance, a permanent bubble reflation policy, and a bare-knuckled attempt to turn the BP oil spill into a pork-barrel bonanza disguised as a tax break.
This is the man Cathy Crabill admires for his constitutional scruples. Yikes!
[...] Lest we forget, the man who repeatedly talks about the proper role of constitutional government sponsored legislation that would have created an insurance moral hazard and could have partially ref…. He even had this to say about it: Providing tax relief to first-time homebuyers and to those [...]
[...] a position I consider far, far more dangerous than the individual mandate; he has openly supported reflating the housing bubble and creating moral hazard in the insurance market via tax-code chicaner… he refuses to support the Ryan Medicare reform; and he has called for maintaining the current [...]
A tax credit is a tax cut, which always results in more money in the hands of taxpayers and less in the hands of government bureaucrats. If you oppose Dr. Paul on this, then by definition you are in favor of bigger government and more bureaucracy. The Fed caused the housing bubble,not tax cuts. That tax cuts caused the housing bubble is something an Obama “economist” would say.
Tom DiLorenzo
Professor of Economics, Loyola University (VPI grad)
Loy
Tom I wanted to make the same point but you beat me to it
Hey DJ,
When you wrote “permanently extend the first-time homebuyer tax credit and to make the credit available to people whose homes have been destroyed by a natural disaster” it does not mean “reflate the housing bubble”.
I think what is intended by Mr. Paul is that if the federal government is going to steal people’s money through taxes and waste it on Romney-like government mandates –it’s better to claw back the money for his constituents so that they can use it for their own productive purposes.
Is that so hard?
A tax credit that rewards a certain behavior while distorting the market grants the government more power even as it “loses” revenue. Just because the government bureaucracy giving away the goodies and regulating behavior is the IRS instead of HUD doesn’t make it better.
Reagan understood this; that’s why he pushed to get rid of the ornaments to the tax code in order to get real reductions through lower rates. Paul’s action would have made it harder to lower rates overall while distorting the market for a favored constituency. Bill Clinton did this through “targeted tax cuts” for years, because he understoond government power and influence was about more than just revenue.