President Obama released his 2013 Budget proposal only this week, but housing advocates are already coming out against the measure, citing reductions in services and revenue models that they claim are essential for housing’s future.
On the association side, National Association of Realtors President Moe Veissi has released a blazing statement specifically targeting the budget’s suggested alterations to the mortgage interest deduction (MID).
“NAR is strongly opposed to elements of President Obama’s budget proposal that would limit itemized deductions, including the mortgage interest deduction, for thousands of families,” Veissi said. “NAR firmly believes that the mortgage interest deduction is vital to the stability of the American housing market and economy. We urge the president and Congress to do no harm.”
Arguing that a limitation of MID would amount to an increase on taxes, Veissi said that such an increase would negatively impact home values at all price levels and would be detrimental to the middle class.
“This would destroy middle-class wealth accumulation and trillions of dollars in home values nationwide,” Veissi said. “The MID must not be targeted for change. Any modifications to the deductibility of mortgage interest will harm housing and homeowners, and until housing markets have stabilized, there cannot be a robust economic recovery.”
Rhetoric aside, some of Veissi’s logic is difficult to reconcile with the available data on U.S. income. As AgentGenius pointed out, the alterations to MID that President Obama is offering would reduce the value of itemized deductions for MID to 28 percent for married couples and individuals with incomes exceeding $250,000, down from 33-35 percent.
A nicely-sized deduction, to be sure, but not quite the middle-class crippling act that Veissi’s comments allude to. Based on the latest projections from the U.S. Census Bureau, of the approximately 116,011,000 households in the United States in 2006, just 1.93 percent, or 2,240 households, had annual incomes exceeding $250,000.
For housing advocates, though, the financial damages do appear more pronounced. According to a CBS News analysis of the President’s budget, spending for Housing and Urban Development will be $44 billion for the 2013 fiscal year, a massive 21.3 percent decrease from 2012’s budget that some people are not happy about.
A City Limits post, which chronicled some of the prospective cuts, collected quotes on the budget from the National Low Income Housing Coalition, which said the budget “contains a mix of deep cuts, flat funding, and troublesome policy recommendations” for low income housing.
The coalition was particularly incensed over reductions to Project-Based Rental Assistance, which would cut the program to the extent that some public housing agencies would be unable to administer the program for its entire duration.
Sheila Crowley, who is president of the coalition, was pointed in her remarks.
“HUD has tried this budget gimmick before and it wrecked havoc in the lives of hundreds of thousands of vulnerable people,” she said in a statement printed by City Limits.
“It is Scrooge-like,” she also said, referring to the budget’s plan to raise minimum HUD rents to $75.
City Limits did point out, though, that the budget would restore funding for Sustainable Communities, a program that joined HUD, the Department of Transportation and the Environmental Protection Agency to “create environmentally sound, transit-oriented development.”