Reports on Draft Deficit Reduction Proposal are Premature

11/12/10

An initial draft proposal for reducing the federal deficit that includes a suggestion to pare back the mortgage interest deduction is thin on details and will likely change many times before it’s released in any final form.

The New York Times Wednesday, and other national media on Thursday, published part of a leaked draft by the co-chairs of President Obama's Deficit Reduction Commission; the commission’s report won’t be released until Dec. 1 at the earliest and will likely look very different from the leaked draft. Therefore, early reactions to the plan are pure conjecture.

In an advisory sent to association leaders late Wednesday, NAR said media reports that the commission has recommended reducing the mortgage interest deduction are false.

The White House itself said in a statement released Wednesday that the draft is "only a step in the process toward coming up with a set of recommendations." The White House quote was included in a Nov. 11 report in the Washington Post.

Indeed, the process of arriving at a deficit reduction proposal that a majority of the commission can agree on – 14 of its 18 members must agree on any plan before it can be released – is likely to be difficult. Once the commission does release a report, it will go to President Obama, who could include some or all of the commission’s proposals in the federal budget he submits to Congress in February of next year. The proposals will then face a long road of hearings and other scrutiny in Congress.

Despite how the media might position the commission’s final report, the reality is that action in Congress on any of the commission’s final recommendations is likely to take many months, if not more than a year. NAR’s strategy in the face of what it expects to be a lengthy and complex debate in Washington on ways to reduce the federal deficit is to reserve its major grassroots activities until the debate crystallizes around specific legislative proposals actively being considered by Congress.

NAR will now provide regular updates to local REALTOR^® associations on the progress of the deficit reduction commission and its recommendations and on NAR’s efforts with Congress and the media in support of home ownership through its Home Ownership Matters campaign. In addition, regular updates will be posted at www.realtor.org/homeownership.

Meanwhile, here are four points to be aware of as the media continues to report on the initial discussion draft by the co-chairs of the deficit reduction commission:  

• The Deficit Reduction Commission has not yet released its plan – the commission is scheduled to submit its report to President Obama on Dec. 1. Any suggestions related to the recommendations at this point are premature and only conjecture. NAR will not engage in a speculative debate in the media about proposals that may or may not be in any final version of the report because doing so could lend credibility to what may be transient ideas. 
• Specific government incentives for home ownership in this country have existed for more than 150 years. That’s because home ownership helps foster communities, creates social stability, builds wealth over the long term, and contributes significantly to the U.S. economy. If specific proposals to diminish federal government incentives for home ownership were to appear down the road in any draft federal legislation, NAR would immediately take action to oppose such proposals.
• REALTORS® believe that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.

NAR looks forward to working with public policy makers and industry leaders to ensure a model for responsible, sustainable home ownership. More on efforts to keep the record straight on home ownership is on REALTOR.org/homeownership.

Access an initial NAR analysis of the tax aspects of the draft deficit reduction plan by clicking here.