Posted 7:01 PM by Robert

Political Lunacy

A presidential panel sets out to provide the perfect paradigm. It's the only realistic explanation. There is simply no other way one can explain recommendations like this:

President George W. Bush's tax advisory panel, rejecting a fundamental overhaul, agreed to recommend limiting tax breaks for homeowners and employer- provided health-care benefits to help pay for repealing the alternative minimum tax.

The panel, meeting in Washington today, agreed the current $1 million cap on deductible mortgage interest should be reduced, possibly to about $350,000, and that the deduction should yield no more than a 25 percent tax savings, down from a top savings now of about 35 percent.

Of course, there is always the outside chance that the panel is bored, and just wants to see the spectacle of all those over-extended homeowners plunged into newly-tightened bankruptcy - and ultimately, foreclosure on those many homes! One could certainly achieve that result quickly by making mortgage payments more burdensome by reducing the tax benefits of home ownership. And it might be fun for some people to watch the lending-institution and mortgage-securitization-market collapse, and likely general economic Armageddon. But it seems like rather expensive entertainment.

Of course, there is talk of a "transition period" that would supposedly allow existing homeowners to keep their benefits ... it's just when they (or their foreclosing lenders) try to re-sell their homes that the roof would fall in.

And as for reducing the tax benefits of healthcare plans? It makes some economic sense ... but politically? Well, snowballs ... hell ... that kind of thing. Mohit Ghose, vice president of public affairs at America's Health Insurance Plans was understated: "Voters are sending a very clear message that they do not support changing the tax status of employer-sponsored or employer- provided health care.'' You might say.

Panel Vice Chairman John Breaux, a Democrat and former senator from Louisiana, said he realized both proposals may lack "political appeal" in Congress. "Our job is to make bold proposals without regard of the politics." Maybe. Or maybe Mr. Breaux wants to make the rest of the country resemble the current state of the southern portions of his home state.

Or perhaps the panel just didn't want to repeal the Alternative Minimum Tax in the first place?

Why didn't the panel just propose to pay for the repeal of the AMT by closing the Washington Monument and similar venues? It would have been more likely and realistic.