When Congress passed its economic “stimulus” package this February, lawmakers tried to make it look like the plan would help lower-income Americans while not benefiting the rich. They made the $600 tax credit ($1,200 for married couples) refundable and excluded anyone making more than $87,000 ($174,000 for couples) from qualifying. Looks progressive on first glance — until you do the math on a temporary provision Democrats inserted into the bill and now want to make permanent in new housing legislation. Fortune magazine’s Allan Sloan explains:
The stimulus package raises the maximum size of a “conforming” mortgage to $729,750 from the previous cap of $417,000. A conforming mortgage is a mortgage that can be sold to Fannie Mae (FNM) or Freddie Mac (FRE, Fortune 500), and it carries a lower interest rate than “jumbo” loans that exceed those limits. …
This higher limit translates into cheaper refinancing or a higher sales price, because the lower interest rate means buyers can presumably afford to pay a higher price. …
We’re talking major money here, folks. In today’s market, the interest difference between a conforming loan and a non-conforming loan for a 30-year fixed-rate mortgage is a whopping 1.27% a year, according to Keith Gumbinger, a vice president at HSH Associates, a mortgage research firm. So a $700,000 conforming loan at 6.01% would carry almost $9,000 less annual interest than a nonconforming loan (at 7.28%).
So to recap, Democrats in Congress gave middle- and lower-income families a one-time check for $1,200. Meanwhile they gave wealthy Americans as much as $9,000 in interest for 2008, and if the new housing bill passes, $9,000 a year for the life of a new loan. Should we be surprised that Democrats are now in the business of giving peanuts to the poor while saving the real giveaways for the wealthy? Not at all. The wealthy are the Democrats’ new base. Heritage’s Mike Franc explains:
For the demographic reality is that, in America, the Democratic party is the new “party of the rich”. More and more Democrats represent areas with a high concentration of wealthy households. Using Internal Revenue Service data, the Heritage Foundation identified two categories of taxpayers — single filers with incomes of more than $100,000 and married filers with incomes of more than $200,000 — and combined them to discern where the wealthiest Americans live and who represents them.
Democrats now control the majority of the nation’s wealthiest congressional jurisdictions. More than half of the wealthiest households are concentrated in the 18 states where Democrats control both Senate seats.