During the 2010 campaign cycle, I was happy to travel to events for congressional candidates across the country. Some of these great candidates lost, like Anna Little in New Jersey and Andy Vidak in California. Others won, like Jim Renacci in Ohio, and Paul Gosar and David Schweikert in Arizona.
Many other candidates appeared on air with me. I thus heard a lot of campaign speeches and asked a lot of candidates questions and heard lots of answers.
Not one of these candidates, winner or loser, campaigned on ending or limiting the deduction for home mortgage interest.
Not one.
Almost 40 million families use the deduction, 65 percent of whom earn less than $100,000 a year and nine out of 10 of whom make less than $200,000 annually.
The value of the deduction — which will grow as interest rates begin their inevitable rise — is built into the value of every home in America. Cut it, and the value of every home declines. Eliminate it, and a minimum drop of 10 percent in the value of every home follows.
Even if a limitation is imposed only on the most expensive homes, those will fall in value and thus all homes below them fall in value.
The National Association of Realtors estimates that the end of the deduction means a 15 percent drop in the value of homes. Imagine the impact on people’s confidence.
Imagine the impact on the bottom line of banks.
No Republican campaigned on limiting or ending the deduction, and when House GOP Whip Kevin McCarthy appeared on my program last Thursday, he flatly assured my audience that there was no proposal to tinker with the deduction on the table.
“That is not going to get through Congress,” McCarthy said. “Let’s be realistic.”
“The economy has collapsed starting with housing,” he continued. “We’re still weak within it, and we’re going to go in and do more damage to it?”
“And you’re going to tell the American public that went in and bought a house and have this deduction, and budgeted themselves, that now we’re wiping it away?” McCarthy concluded.
Still, on Saturday, the Washington Post reported that the “common ground” between the president and House Speaker John Boehner included a reduction in the mortgage interest deduction, a change that would raise the taxes of millions of Americans and violate the GOP Pledge to America. So, too, would changes to the charitable deduction.
Republicans campaigned on the Pledge for America, which promised in part: “We pledge to make government more transparent in its actions.” The pledge also promised to “permanently end all job-killing tax hikes.” Tell home builders that slashing or ending the mortgage interest deduction won’t kill jobs.
The secret negotiations have to be opened up, and Boehner and House Majority Leader Eric Cantor have to lay out where the $800 billion in revenues that the speaker offered the president would come from — exactly.
The GOP leadership has twice now been said to be “close” to huge “deals” with the president, the outlines of which haven’t even been shared with the GOP caucus.
Perhaps the reports are erroneous. Perhaps the GOP hasn’t caved on either of these deductions or any other element of the Pledge to America, but at the very least the president has played the process like a fiddle, and all because the GOP abandoned its pledge of transparency.
The victory in 2010 wasn’t waged on the promise of grand bargains resulting in stimulus-sized tax increases, whether or not they are called “reform” by Beltway insiders.
The pledge was a promise, and the GOP caucus should refuse to break it.
Examiner Columnist Hugh Hewitt is a law professor at Chapman University Law School and a nationally syndicated radio talk show host who blogs daily at HughHewitt.com.
