Housing Subsidies
Kamala Harris claims that her plan to give “$25,000 for first-time home buyers to help them with a down payment” will “bring down the cost of housing.”
IN FACT, doling out taxpayer money to buy homes will raise the price of housing. In the words of Deborah J. Lucas, director of the MIT Center for Finance and Policy and former chief economist of the Congressional Budget Office:
- Government “subsidies tend to affect the price of goods and services so as to reduce the benefits to the intended beneficiaries. Consider the mortgage guarantees offered to first-time home buyers by the FHA. The program increases the demand for housing, which in turn puts upward pressure on home prices.”
- “Such price increases benefit current homeowners at the expense of first-time home buyers, possibly offsetting the value of the mortgage subsidy.”
- “As another example, some observers point to the easy and low-cost access to federal student loans as fueling the steep rise in the cost of higher education in the last decade.”
U.S. federal, state, and local governments already spend a combined total of $9.6 trillion per year, or an average of $73,149 for every household in the nation. Kamala’s plan will add to that tab and further socialize the U.S. economy.
