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Talk about extreme inefficiency.
None of this surprises me, of course.
Trusting the government to spend your money wisely is like giving your sixteen year old son a bottle of whiskey, a box of condoms, a VISA card, and a plane ticket to Las Vegas and expecting him to behave himself for a weekend.
Anyone who works in the private sector who spent SEVENTEEN BILLION DOLLARS, the cost of the Obama tax credit, in such an inefficient and quite frankly silly way would likely be facing a career loss. A demotion, maybe. Even getting fired. Certainly taken off the fast track for promotion.
But in the public sector, what happens when someone screws up so badly? Just about nothing. Business as usual. Cynics would say that U.S. taxpayers should deep down really feel lucky that the program only cost $17 billion.
Anyone who has ever read Milton Friedman or Ayn Rand or thousands of other conservative thinkers would know that the people in the government who work for you really have no incentive to spend your money wisely.
See, IT'S NOT THEIR MONEY.
You worked for it. You put up with a nasty boss (maybe) for it. How many hours did you spend stuck in rush hour traffic or on a crowded bus or train each week for that paycheck? Those wages were earned by your work and sacrifice, be it time away from your family or from those activities you enjoy.
YOU have an incentive to save your money when it gets spent. Others do not. It's just their job to spend your money. Millions of people commute to each day to a government office and collect paychecks just to figure out ways they can spend the money other people earned.
See the irony? They take your money to spend it in ways you never would yourself. And on things you would often find socially offensive, even repugnant.
Tax subsidies of one kind of another just distort the efficiency of the market, in this case the homeowner tax credit just shifted sales from one quarter to the next. Is this necessarily a bad thing, however? Isn't a definite home sale now better than an indefinite one later especially when the economy is struggling and every job matters?
Maybe, but at the cost of $80,000 each???
Just 303,000 homes sold because of the tax credit when a total of 1.83 million were sold in total. That means that 1,500,000 homes were essentially going to be sold anyway---with no tax credit at all.
I really hope this tax credit is not extended once again. Of course I want people to buy homes for themselves and for investments but the place to direct extremely limited government resources these days is to get employers to hire new people. Reducing unemployment is key to economic stabilization and, most importantly, new solid economic growth.
Not yet another stock or real estate bubble boom, but genuine sustainable bursts of hiring where people have their choice of jobs because companies are continually being formed and need new hires.
You get that kind of growth when taxes are low, regulation is declining, when the national currency is strong, when capital is flowing into the United States instead of out of it, and, most importantly, when the government focuses on jobs no private company could ever do, necessary jobs essential for the safety of the Republic, like providing for the national defense and keeping us safe from terrorists who like to commit mass murder against our citizens.
But when I see a bomber on a U.S. airplane with explosives in his underwear landing in Detroit, our finest and most experienced CIA agents being played by a double agent right out of John le Carre and murdered in Afghanistan by a suicide bomb, a mentally unstable U.S. Army psychiatrist who one side of the government knows is corresponding with a cleric in Yemen another side of the very same government finds so dangerous it is trying to arrest or kill him, and probably most shocking of all, when two publicity addicted wackos can seek into the White House without an invitation during a time of war I can only ask one question:
Why should I trust these people can spend my own money better than I can?
Robert J. Abalos, Esq.
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Homebuyer Tax Credits ‘Exceptionally Inefficient’: Chart of Day Jan. 7 (Bloomberg) -- Tax credits designed to revive the U.S. housing industry are costing taxpayers as much as $80,000 for every additional home sold, according to Michael R. Widner, a Stifel Nicolaus & Co. analyst.
The federal program is “an exceptionally inefficient use of tax dollars,” Widner wrote yesterday in a report. He estimated the total cost through last November at $17 billion, “a high price to us for relatively little benefit.”
The CHART OF THE DAY shows existing-home sales would have fallen at a 2 percent annual rate in the three months ended in November without the credits, based on his estimates. Instead, the pace rose 28 percent, according to data from the National Association of Realtors. Resales accounted for 92 percent of homes sold during the past 12 months.
Widner estimated that 1.83 million new and existing homes were sold to first-time buyers last year through November, and only 303,000 of them changed hands because of the tax benefit. The $80,000 figure reflects his assumption that 30 percent of the added sales would have been made this year, not in 2009.
President Barack Obama’s extension and expansion of the program in November will do little to bolster this year’s sales, the analyst wrote yesterday in an e-mail. First-time buyers got another five months, until April 30, to obtain an $8,000 credit. Buyers who owned a home became eligible for a $6,500 credit.
“People who were going to be lured in had a good nine months to make their decisions before the last-minute extension and acted before it,” he wrote.
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