It appears Georgia Senator Johnny Isakson does not believe in free markets and limited government.  I read few news articles about the housing proposal that he is trying to push into the latest stimulus bill at a cost of $20 billion dollars.  To quote a recent article:

“Specifically, Isakson’s Fix Housing First Homebuyer Tax Credit legislation would also enhance the existing homebuyer tax credit by:

• Extending the eligibility period for the credit to December 31, 2009;
• Increasing the credit amount to 10 percent  of the home price capped at 3.5 percent of FHA loan limits (geographically dependent) – ranging between approximately $10,000 and $22,000;
• “Monetizing” the credit so it is available at time of closing; and
• Allowing the credit to be used in conjunction with mortgages financed by state or local bonds.”

I read the full article and I bet he is right, it would spur some activity in the housing market but at what cost? Not only does it cost $20 billion but what happens to the market as soon as the incentive runs out in 11 months?  I guess sales and prices will slide back again using the same logic he uses to support his ill conceived proposal. Read the rest of this entry »