Subsidies and regulations created the 2008 crisis. Guess what the 2020 candidates are proposing.
Politicians and regulators played a central role in the housing boom and bust that led to the 2008 financial crisis. But you’d never know that, judging from the Democratic presidential candidates’ housing proposals, which double down on the policies and interventions that caused the problem in the first place.
Sen. Elizabeth Warren wants to spend half a trillion dollars over 10 years on “affordable housing” subsidy programs. Under her plan, the federal government would provide down-payment grants for first-time home buyers living in communities that have faced racial discrimination in the past. She would also expand the purview of the Community Reinvestment Act, which is used by federal agencies to pressure mortgage companies into relaxing their lending standards for applicants from certain racial and ethnic groups.
Sen. Cory Booker, meanwhile, envisions a larger role for the federal government in the residential rental market. His plan is to reduce housing costs via a refundable tax credit for tenants. If more than 30% of your gross income goes toward rent—which is the case for “almost half” of all renters, according to the senator—you would qualify for a payout from Uncle Sam. Perhaps Mr. Booker reasons that subsidies have worked so well in bringing down the cost of college, we should apply them to housing as well.
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