As we approach the presidential election in November, Weekend Edition is seeking your questions about issues and candidates in a new segment called Reporter Hotline. This week, we answer inquiries about the candidates' policies on housing and taxes.
The Housing Market
On paper, President Obama and Gov. Mitt Romney's policy prescriptions are pretty similar. The one major difference is a question of financial regulation. The president is a strong supporter of the Dodd-Frank financial regulations, which include a lot of strong consumer protections for homebuyers. Romney wants to roll back some of those regulations, but he hasn't specified which parts.
Question from Mark Copeland of Chicago, Ill.: "In the presidential debate Wednesday, Romney said, 'I will eliminate all programs by this test, if they don't pass it: Is the program so critical it's worth borrowing money from China to pay for it? And if not, I'll get rid of it.' Under this litmus test, which federal housing programs will [Romney] eliminate?"
Answer from NPR's Yuki Noguchi: "Currently, there are several housing programs. There's HARP, which is the refinancing program, and HAMP, the mortgage-modification program, and then the Obama administration also backs plans that allow homeowners to refinance even if they're under water, which is to say that they owe more on their home than it's now worth. And they also support some forms of loan forgiveness.
"Mr. Romney's campaign has not been specific about which of those programs he'll keep or which he may scrap. Last year, he said in an interview that he believes the foreclosure market should be allowed to hit bottom so that private capital can come in. And many people heard that and thought this was sort of critical of all government intervention designed to prevent foreclosure.
"The campaign has backed away from that, and they told me recently that they do support some forms of foreclosure alternatives, although, again, no specifics about which of those alternatives they prefer. .... But they also say the overriding fix for housing has more to do with improving the economy and the jobs picture."
The Tax Code
Question from Darren Thiesen of Rathdrum, Idaho: "I do have questions if Romney ever does plan to, before the election, actually come up with specific loopholes, specific things that he would like to cut."
Answer from NPR's Scott Horsley: "Gov. Romney has been vague about the loopholes he would close in order to offset the lost revenue from lowering tax rates. So in the absence of those details, fiscal analysts have had to do some guesswork. One independent study that President Obama often sites looked at what high-income people would save if their marginal tax rate were lowered by 20 percent, and then looked at all the tax breaks high-income people currently get. [The study] concluded, even if you took away all their tax breaks, the rich would still end up paying less. Now, that's assuming you didn't do away with tax breaks for savings and investment.
"But if you did that, and the rich paid less, then the only way to keep government revenues steady, as Gov. Romney said he wants to do, would be for middle-class families to pay more. The governor argued that if that's how the numbers worked out, he'd simply change his plan to make sure the deficit doesn't go up and that the relative tax burden on the wealthy doesn't go down.
"President Obama starts by saying he wants to make the tax code more progressive — that means the share of tax burden paid by the wealthy would increase. Beyond that, he says he's open to reforming the tax code, lowering rates and doing away with loopholes, which everyone says would make it more efficient. But he doesn't start with a goal of cutting rates by 20 percent."
Question from Ian Gard, commenting on NPR.org: "Now we are in this situation with way too many loopholes. Assuming that we fix this, though, what is to prevent Congress from doing this again?"
Answer from Horsley: "The thing is, if you want to encourage some kind of behavior, whether it's going to college or buying a home or building a factory, both Democrats and Republicans have found it a lot easier to sell that program as a tax break than, say, a direct government grant — even though, from an economic point of view, it's pretty much the same. So, over the last few decades, the tax code has become the vehicle for a whole lot of government policy. Some of that policy, perhaps, very worthwhile, but it's made for a very inefficient tax system."
Question from Bill Shipley of Chicago: "I'd like to know what the candidates' positions are on raising the income cap on payroll taxes, given that these are the primary source of funding for Social Security and Medicare."
Answer from Horsley: "It's an interesting question, you know, because our income tax system is somewhat progressive, but payroll taxes for Social Security are flat to regressive — you pay the same rate on every dollar of income, up to about $110,000. And beyond that, you pay nothing. There's no such cap on the portion of the payroll tax that goes for Medicare, by the way.
"I'm not aware that President Obama's addressed this idea specifically, though I suspect it's something he might be open to. He did rely on an extra payroll tax of about 1 percent for the wealthy to help fund his health care plan. That only kicks in at the $200,000 level — not $110, 000 — because, of course, he promised back in 2008 not to raise taxes on anyone making less than $200,000."