We hoped President Biden had merely misspoken during last week’s NATO press conference when he mentioned capping rents. Alas, no. On Tuesday he unveiled a nationwide rent-control plan, another classic White House policy contradiction: Subsidize housing, then discourage its development.
Higher mortgage rates and home prices are pushing Americans out of the home-buying market. This is contributing to higher demand for rental housing. Rents on average nationwide have risen 30% over the last four years and even more in Sun Belt states with fast-growing populations. Evictions are also increasing in many markets.
Enter Mr. Biden, who on Tuesday pitched conditioning “valuable federal tax breaks” on landlords capping rent increases at 5% annually. The White House says its plan would apply to “corporate” landlords with more than 50 units, covering more than 20 million units or roughly half the country’s rental stock.
What are such lucrative tax breaks? The press release refers to “faster depreciation write-offs.” Under the current tax code, residential rental property owners can depreciate a building’s value over 27.5 years, rather than 39 as for other types of commercial real estate. A shorter depreciation schedule increases the incentive to invest in rental housing.
Alas, the Trump mini-boom was tempered by the economic uncertainty and costs of his tariffs that hit friendly nations and adversaries alike. These included 25% duties on steel and 10% on aluminum, as well as levies on washing machines, solar panels and an array of Chinese goods that raised costs for U.S. businesses and consumers. “Tariff man” forgot about the common man.
The Tax Foundation estimated that the Trump tariffs cost American households more than $625 annually. A 2019 study by Fed economists looked at two waves of trade policy “shock,” first in 2018 and then in the first half of 2019, and estimated the impact reduced GDP growth by about one percentage point. Tariffs contributed to the slowing economy and business investment late in 2019, which then plunged at the onset of the pandemic.
John Stossel reports that while the growth of regulation slowed under Trump, it didn’t stop.
Arnold Kling rightly applauds Matt Yglesias.
Commentary on the left and right tends to paint a gloomy picture about whether currently young generations will be economically better off than previous ones.
Yet such pessimism has existed for centuries, even while improved outcomes have mainly been the norm. FDR’s “forgotten man” and the “Make America Great Again” slogan — as used by Trump, Clinton, and Reagan — both prey on inaccurate nostalgia.
