When Economics and Politics Collide By: Gabriel PotterMBA, AIFA® 2017.08.08

Our readers may remember I have previously recommended NPR’s podcast, Planet Money, for its exceptionally good results explaining complicated economic issues in a language any of us can understand.  I found myself thinking of an older Planet Money episode which aired during the 2012 Presidential contest between Obama and Mitt Romney – A Tax Plan that Economists Love and Politicians Hate (http://www.npr.org/sections/money/2012/10/18/163106924/a-tax-plan-that-economists-love-and-politicians-hate).  I remembered this podcast because one key consensus recommendation from economists across the political spectrum actually found an advocate in the current administration.  Apparently the Trump administration is considering lowering the cap on mortgage interest deductions from $1M to $500K to help offset some of the tax cuts they’d like to install.  I won’t go into the details of the deduction – the linked Planet Money podcast is only 4 minutes long.

I’m surprised (and a little impressed) that the administration is potentially walking back support for this very popular tax break.  Readers know that I’ve been critical of the administration’s willingness to target policies based on preconceived biases & impulse over experts & vetted evidence.  Therefore, it is only fair that we should credit the administration for taking a politically unpopular step (suggesting an increase in taxes for the large home owners) even as it removes a perverse economic incentive which artificially inflates housing costs and provides needed revenues.  

Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

More about Gabriel Potter
Sign up for our Newsletter
Sign up for our Newsletter