Pointless policy or stimulus?

From the Record:

State housing stimulus merely reshuffles dwinding stack of cash

IMAGINE YOUR boss suddenly announced that the company would be giving $5 to the next 20 employees who took their lunch breaks, and that the money would be coming out of everyone else’s paychecks.

It would certainly benefit the few who were first into the cafeteria, and it might encourage some workers to take a break that they otherwise would not. However, everyone who had already eaten or might have been stuck on conference calls would see this as an arbitrary and pointless policy.

Unless the people affected were Trenton lobbyists — then they would call it stimulus.

Governor Christie recently vetoed a bill that would have given New Jerseyans of all incomes up to $15,000 if they purchased a home during a tax credit program, which would have existed until $100 million was spent over three years. Legislators are now considering a vote to override the governor’s veto. The policy may be well-intentioned, but it would do little to help put New Jerseyans back to work.

Despite being wrapped in the moniker of a tax credit, the $100 million is actually an expenditure and a partial subsidy for home ownership. It has the same impact on the state’s budget as any other subsidy in that all taxpayers contribute to the general fund and then a small segment of New Jerseyans get to take from the pool. Whether the government issues a check or deprives itself of the revenue in the first place is inconsequential.

The state and federal government already give benefits to homeowners through the tax code, such as the mortgage interest deduction. At worst, further subsidies of the real estate market distort consumer choice and partially reinflate the housing bubble by creating artificial demand.

Even in a best-case scenario, this subsidy would minimally affect New Jersey’s economy. The non-partisan Office of Legislative Services estimates that the portion of the credit dedicated to existing home sales evaporates with less than 2,000 transactions per year. That represents less than 2 percent of all existing home sales in New Jersey, even in a down economy.

However, most of these 2,000 sales would not represent new activity. The legislation simply doles out money on a first-come, first-served basis, meaning the overwhelming majority of those transactions would have occurred regardless of Trenton’s action. This is especially true with this tax credit because it would come on the heels of a recently expired and similar federal program. In fact, much of the decline in home sales is because the federal program altered the timing of home sales, but not overall activity. There is no reason not to expect a similar outcome in New Jersey.

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59 Responses to Pointless policy or stimulus?

  1. Confused in NJ says:

    Those who can work, those who can’t sit in Trenton.

  2. The chairman says:

    “Speaker Nancy Pelosi, D-CA, who called the House back into session this week to pass a $26 billion bailout bill to help cash-strapped states pay for 140,000 teachers, said the legislation’s price tag “may sound like a lot of money, but the value of having all of those union members on our Democrat campaign team makes it well worth the investment.” “Most people don’t understand all of the good that these union members do,” said Rep. Pelosi. “These people make the phone calls, give the money, do the door-to-door work because they have a personal financial stake in the reelection of Democrats”


  3. Libtard and the City says:

    Nice research on FHA and a few issues about it that we didn’t discuss here.

    “Considering the rate at which FHA mortgages are now becoming delinquent, there will be more than 700,000 seriously delinquent FHA mortgages within a year.”


    Part II is linked from the Part I.

  4. Painhrtz says:

    weird idea for trenton how about paying down some of the debt with that money

  5. RentinginNJ says:

    Most of the money would go toward subsidizing the purchase of new homes versus existing homes. Given that there is more money available for new homes and new homes make up a smaller portion of overall sales, it is likely that funding for new home purchases will last longer.

    This puts sellers of existing homes at a competitive disadvantage to new home builders, who can flash a $15k incentive courtesy of the taxpayer. So, as a seller of an existing home, not only will you fund this as a taxpayer, it may harm your competitive position in the market.

  6. still_looking says:

    Another night of underinsured/uninsured/charity care/medicaid patients all in need of help.

    Then there is the contingent of folks who legitimately need hospitalization for additional workup who refuse to stay because they fear losing their jobs.

    Then there is the difficulty of getting consultants to see uninsured patient out of the hospital. It’s just getting uglier and uglier.


  7. jj says:

    Subject: 6 Months til the Largest Tax Hikes in History

    In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:

    First Wave: Expiration of 2001 and 2003 Tax Relief

    In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families.
    These will all expire on January 1, 2011:

    Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:

    – The 10% bracket rises to an expanded 15%
    – The 25% bracket rises to 28%
    – The 28% bracket rises to 31%
    – The 33% bracket rises to 36%
    – The 35% bracket rises to 39.6%

    Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.

    The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

    Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.

    Second Wave: Obamacare

    There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:

    The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

    The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. ( National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.

    The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

    Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

    When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:

    The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

    Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”

    Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

    Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

    Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.
    PDF VersionRead more: http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171#%23ixzz0sY8waPq1

    Now your insurance is INCOME on your W2’s……
    One of the surprises we’ll find come next year, is what follows – – a little “surprise” that 99% of us had no idea was included in the “new and improved” healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!

    Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that’s a private concern or governmental body of some sort. If you’re retired? So what; your gross will go up by the amount of insurance you get.

    You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That’s what you’ll pay next year. For many, it also puts you into a new higher bracket so it’s even worse.

    This is how the government is going to buy insurance for the15% that don’t have insurance and it’s only part of the tax increases.

    Not believing this??? Here is a research of the summaries…..

    On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002 “requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income.”

  8. Nicholas says:

    I guess people are on vacation in August? The post have been a bit slim and it is already afternoon. Hmm….

    Wake up people, I need something to read while I work.

  9. still_looking says:

    jj 8

    Time to look for a cash business.


  10. jj says:

    still_looking says:
    August 10, 2010 at 1:11 pm
    jj 8

    Time to look for a cash business.


    Lets go over my cash business skill set.
    Trouble is at my age the Cougars who will pay for my services are so old they fart dust, I haven’t sold nickle bags since college so I can’t go the “weeds: route, Scalping is all computerized now and requires tons of cash and lots of risk, pyramid schemes always good but when they fall apart you may get a leg or two broken, damm carfax makes it harder to roll back odometers, mixed tape business and hot VHS tapes are dead. Inflation has made returing cans for five cent deposit a bad deal. The mexicans have runined margins on lawn service and maids business. Damm it all the shady cash business have been runined in last ten years!!!! What is a slim shady like me need to do to make a little off the books coin?

  11. still_looking says:


    bagel shop. cash only.


  12. Painhrtz says:

    JJ thanks for ruining my lunch. That tax structure is like the national version of NJ

  13. Libtard and the City says:

    “Trouble is at my age the Cougars who will pay for my services are so old they fart dust,”


  14. Confused in NJ says:

    MOSCOW – Prime Minister Vladimir Putin climbed into a firefighting plane Tuesday and dumped water on two of the hundreds of wildfires sweeping through western Russia and cloaking Moscow in a suffocating smog.

    Putin has been a very visible leader in the battle against the fires, which have caused billions of dollars in damage and left thousands homeless in the past two weeks. He has demanded that soldiers help overstretched firefighting brigades and has walked through smoldering villages, consoling residents and promising them new homes by fall.

    Putin took off Tuesday in a Be-200 firefighting plane and then moved into the copilot’s seat. Television footage showed him pushing a button to unleash water on blazing forest fires about 120 miles (200 kilometers) southeast of Moscow.

    After hitting the button, Putin glanced toward the pilot and asked, “Was that OK?”

    The response: “A direct hit!”

    The stunt was classic Putin. In past years, he has copiloted a fighter jet, ridden a horse bare-chested in Siberia and descended to the bottom of Lake Baikal in a mini-sub. Just last month he drove a Harley Davidson motorcycle to a biker rally.

    Sort of reminds you of Obama in the frogman suit personaly sealing the Gulf Well leak with cement, or Bush personaly loading sandbags during Katrina. Then again, maybe more like the old Presidents like Teddy Roosevelt who actualy did something before, during, and after office.

  15. Confused in NJ says:

    “Speaker Nancy Pelosi, D-CA, who called the House back into session this week to pass a $26 billion bailout bill to help cash-strapped states pay for 140,000 teachers, said the legislation’s price tag “may sound like a lot of money, but the value of having all of those union members on our Democrat campaign team makes it well worth the investment.” “Most people don’t understand all of the good that these union members do,” said Rep. Pelosi. “These people make the phone calls, give the money, do the door-to-door work because they have a personal financial stake in the reelection of Democrats”

    How is this not illegal?

  16. relo says:

    18: Parodies aren’t illegal.

  17. Anon E. Moose says:

    Gee, this kind of souns like Debtor’s Prison.

    Convicted con-man can avoid jail if he makes restitution to his victims as part of a plea deal. The hook is, he doesn’t have the money, but plans to win it on the poker tournament circuit.


  18. Confused in NJ says:

    19.relo says:
    August 10, 2010 at 2:01 pm
    18: Parodies aren’t illegal.

    They are when their True.

  19. relo says:

    18: Though your point remains.

  20. soak the rich says:

    Parody does not make $26B to disappear

  21. Confused in NJ says:

    Advocates for the poor were protesting a provision to accelerate the phasing out of an increase in food stamp payments implemented in last year’s economic recovery bill. Under the measure, payments would return to pre-stimulus rates in 2014, saving almost $12 billion.

    James Weill, president of the Food Research and Action Center, said that would be cutting benefits for some 40 million people now receiving food stamps. “Those families will be hungrier and less able to buy healthy diets.”

    Feed a Teacher, starve a Poor Person, now I get it.

  22. hughesrep says:


    ” Mission Accomplished” doesn’t count?

  23. Essex says:

    Hell yeah people. I got this.
    God Bless the very marrow of their bones.
    The America I know is one of compassion and complacency.
    Yes, I know. It’s weird.

  24. Final Doom says:

    Starve the poor, and make them pay more taxes. Obviously, they are poor because God hates them.

  25. Final Doom says:

    Why don’t we just skip the niceties and bring back slavery?

  26. Final Doom says:

    Fed decides to trash the USD slowly and under cover of legitimacy.

  27. Al "Fat Thumbery" Gore says:

    Bernanke gives the Chinese the finger. Ill take a 3.75% 30 year. Time to get my paperwork ready.

  28. Juice Box says:

    Somebody seems worried…

    Warren Buffett shortened the duration of bonds held by his Berkshire Hathaway Inc. after warning that deficit spending could force inflation higher.

    Twenty-one percent of holdings including Treasuries, municipal debt, foreign-government securities and corporate bonds were due in one year or less as of June 30, Omaha, Nebraska-based Berkshire said in a filing Aug. 6. That compares with 18 percent on March 31, and 16 percent at the end of last year’s second quarter…


  29. Final Doom says:

    Al (30)-

    3.75% 30’s will be great. Until they’re not.

    Are those vigilantes I hear at the gate, or just garden-variety Visigoths?

  30. Juice Box says:

    re #30 – AL

    ZIRP won’t make the cows come home.

    The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

  31. Confused in NJ says:

    The Assyrian decended like the wolf on the fold, and his cohorts were all gleaming in purple and gold. Go Ben, Go.

  32. jj says:

    Juice Box says:
    August 10, 2010 at 2:35 pm
    Somebody seems worried…

    Warren Buffett shortened the duration of bonds held by his Berkshire Hathaway Inc. after warning that deficit spending could force inflation higher.

    Buffet is a stock expert, not bonds. Gross the bond expert is going long. I have beaten Buffet for at least ten years straight. That guy is resting on his laurels.

  33. Anon E. Moose says:


    Speaking of being a good year to die (previous thread, [57]), reports are that former Alaska Sen. Ted Stevens is be among 5 reported dead in a plane crash in a remote part of the state. Also in the plane was former NASA Administrator and current EADS [European defense contractor, parent co. of Airbus] North America CEO Sean O’Keefe.

    Rough terrain, difficulty in reaching the crash site, yada yada yada… now’s when they tell us they will only be able to identify the remains by DNA matching and the story will go away.

    I wonder if all the rich people who ‘die’ this year will end up in some kind of Galt’s Gulch?

  34. yo'me says:

    ARROYO GRANDE, Calif. (MarketWatch) — “How my G.O.P. destroyed the U.S. economy.” Yes, that is exactly what David Stockman, President Ronald Reagan’s director of the Office of Management and Budget, wrote in a recent New York Times op-ed piece, “Four Deformations of the Apocalypse.”


  35. Comrade Nom Deplume aux maison says:

    [16] relo

    password protected. what was the message?

  36. Comrade Nom Deplume aux maison says:

    [36] moose,

    I dunno, but there have been a lot of deaths in the past 18 months of people who are not exactly friends of this administration.

  37. Libtard and the City says:

    Wowzers…Ten year crossed at 2.75 a short while ago. Negative interest rates anyone?

  38. Comrade Nom Deplume aux maison says:

    [52] [prior thread] gator

    You aren’t gonna bring that up at dinner, are you? Ewww.

  39. Al "Fat Thumbery" Gore says:

    10 Year At 2.74%. Gotta love the insanity.


    I already got a 4.37 30 year, no cost quote yesterday.

  40. relo says:


    It’s right up your alley. An excerpt: (btw there’s no fee for subscription)

    David A. Rosenberg
    Chief Economist & Strategist

    We just hosted a dinner in Boca Raton, Florida, and once again, the interest among American high net worth families in Canada is overwhelming. Indeed, the relative risk-reward opportunity of investing in Canadian assets relative to the Unites States has rarely been as compelling as is the case today.
    Canada has a structural budget deficit that is one-third the size of the U.S. and ditto for debt-to-GDP ratios. Canada is one of the few sovereigns that actually does have a AAA rated balance sheet.
    A tax wedge is occurring too. The top personal income tax rate in Toronto is 44% versus 53% in New York City. Corporate tax rates in Canada of 25% compared to 35% south of the border. And, the Canadian unemployment rate, on a comparable U.S. basis, is 7.3% compared with 9.5% state-side.
    But yet, Canada, with that tighter labour market, actually has a lower inflation rate (1.0% versus 1.1% in the U.S.). And, since the Canadian economy has managed to recover more quickly than the U.S.A., and with less government support, the Bank of Canada has been able to raise interest rates modestly, but enough to give global investors a nice premium over U.S. alternatives. That goes along with a higher dividend yield in the domestic equity market (especially the banks) — and together with the more attractive bond market, has lured substantial inflows into the local fixed-income market. This is key for a world craving an income stream.
    On top of that, Canada has triple the exposure to the raw material sector — the sector that China is increasingly paying up for as its industrialization and urbanization phase continues unabated. So, the combination of a yield pickup and resource exposure has placed the fair-value line on the Canadian dollar into a nice secular bull pattern.
    Plus, politically — Canada is being run by fiscal conservatives who understand and respect the fact that global capital will flow to where it is treated the best. The Harper government — a throwback to the pro-business Reagan/Thatcher years — doesn’t have to go to the polls for at least another two years, and currently lead in the public opinion surveys. This stands in stark contrast to the move towards more interventionist and left-leaning policies in the Unites States.
    This is why the folks we have met here in South Florida are starting to crave some Northern Exposure.

  41. Juice Box says:

    re #42 – Free money coming next, hurry up and get in line.

  42. Juice Box says:

    Print, Rinse then Repeat.

    WASHINGTON — Acknowledging that the recovery has slowed, the Federal Reserve on Tuesday announced that it would use the proceeds from its huge mortgage-bond portfolio to buy long-term Treasury securities.

    By buying government debt, the Fed is taking an unmistakable step to maintain the large amount of money that it pumped into the economy, starting in 2007, to prop up the financial and housing markets.

    The Fed bought $1.25 trillion in mortgage-backed securities, and another $200 billion in debts owed by government-sponsored enterprises, primarily Fannie Mae and Freddie Mac, and completed the purchases in March. The Fed had planned to allow the size of that portfolio to shrink gradually over time as the debts matured or were prepaid. Instead, the Fed will reinvest the principal payments in longer-term Treasury securities.


  43. Al "Fat Thumbery" Gore says:

    Gold shares on the move. As ruinous as all this will be. There is some comfort to be had knowing bling is goint to the stratosphere.

  44. Libtard and the City says:

    It’s funny. Supposedly the Clinton’s killed everyone as well. Didn’t Bush (celebrated draft dodging reservist) make his first ever war-time flight when landing a plane on the mission accomplished carrier?

    I wish people here would focus on something more real like the looting of America buy ALL of the clowns in charge. Take a look at that MarketWatch article. Pretty scary stuff. There’s plenty of critical left wing literature too, ripping the left.

    In the end, our government is going broke both literally and morally. How anyone today can cheer-lead for either team is beyond me.

  45. Ben says:


    Gross the bond expert is going long.

    What are the odds Gross is the first one out of the exit doors when the time comes?

  46. NJGator says:

    Nom 41 – Definitely not. Can’t believe he did it. I would have had the decency to look away.

  47. NJGator says:

    Did Obama just kill Ted Stevens too?

  48. Libtard and the City says:

    Obama is responsible for all that is bad, just like his predecessor Bush and his predecessor Clinton.

    Enjoy the crumbs.

  49. jj says:

    He is a snake, he f’d other GMAC bondholders by backing out of a tender offer deal after convincing people to join. Of course, I knew if old Bill was saying go it ment no.

    But I own his bond fund and certain things like american general he will quietly buy until it is almost par and then he will tell people on squak box to buy which means sell. He is consistant in his double speak and me and him end up buying some of same stuff at same time, but of course I don’t know to several months later.

    BTW GMAC top yield is like 8.5 and Ford 7.5. Amazing back in March of 2009 I was buuying GMAC a 27% and Ford at 40%. Makes Citi at 16% back them seem like a suckers play. I personally feel IBM at 1% this week is more shocking than Ford when it was 40%

    Ben says:
    August 10, 2010 at 3:34 pm

    Gross the bond expert is going long.

    What are the odds Gross is the first one out of the exit doors when the time comes?

  50. Shore Guy says:

    “Now your insurance is INCOME on your W2?s……
    One of the surprises we’ll find come next year, is what follows – – a little “surprise” that 99% of us had no idea was included in the “new and improved” healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!”

    Finally! I can’t believe there is actually a tax increase that does not apply to us. It is nice not to earn a dime on a W-2, of course paying the freight on our healthcare is a LOT more expensive than the tax on the cost of it.

    Oh well, belly up to the bar boys and leave your money for BO to spend.

  51. Anon E. Moose says:

    Nom [39];

    The Chicago Way?

  52. 1987 Condo Buyer says:

    #54, No W2 tax on healthcare, just gets reported so you see the value. Excise tax on health insurers for cadillac plans worth over $27,000…

  53. evildoc says:

    —Karen Simmons-Braswell, who bought the white colonial-style home in December 2006—-

    I don’t understand. How can one be foreclosed on something one… buys?

    Sounds like she bought nothing, rather took a loan on something. Why do these newspapers keep describing loanowners as “buyers”???

    Well… we know… but still it annoys.

  54. One of the primary things that you should look at whenever it comes to this type of Loans is the payment terms.
    Buying Property

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