Why does the Post insist on attributing motives to members of Congress in their actions? The Post today asserted that the housing bill before Congress is "intended to halt the steepest slide in home prices in a generation." Wow! So the bill is intended to prop up a housing bubble? That's really interesting. I don't know of a single economist who believes that it will have this effect. Given the record level of oversupply in a $20 trillion market, it hard to believe that anyone actually thinks that a bill that CBO prices at $1.7 billion will do the job. We spend far more to prop up prices in farm commodities with markets that may not even reach $100 billion a year. Have the boys and girls in Congress been drinking too much happy water? Some people have argued that this measure will help homeowners facing foreclosure keep their homes. Clearly it will do this in some cases, although the benefit of this can be disputed when much of the money is likely to go to markets where the bubble is still in the process of deflating. There is an alternative explanation of motives that is at least as plausible as the one the Post presents here. Members of Congress may want to help the politically powerful financial industry. The Post recently had an article suggesting this alternative motive for this housing bill, "Vital Part of Housing Bill is Brainchild of Banks".
--Dean Baker
