Housing stimulus plan still bad idea

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The proposed subsidy for home buyers may have been revised since it first came out, but it’s still a bad idea.

Mayor Chris Beutler ought to stop pushing it. The Lincoln City Council should drop it.

Government has a role in fostering economic growth, but it should aim at providing benefit that flows widely in the community.

The housing stimulus proposal would set a dangerous precedent with a significant new expansion of local government into the private sector for the benefit of a narrow set of business interests. As economist Milton Friedman reportedly said, “There is nothing as permanent as a temporary government program.”

The proposed changes to the proposal do nothing to address its fundamental flaws. When Beutler initially floated the idea, he suggested offering prospective home buyers $1,000, using $610,000 in unspent interest on the $10 million stormwater bond issue voters approved in 2005.

After working with homebuilders and Realtors, Beutler revised the program to offer cash grants of $1,000 to $5,000 for new homes up to $325,000 or existing homes up to $150,000. In addition the homebuilders and Realtors would contribute an additional $100,000 to the program.

The changes appear designed to placate critics who thought that the $1,000 cash grant was not adequate incentive to entice prospective buyers. The money would be offered on a first-come, first-served basis.

There’s little doubt that the home building industry is in a slump, which hurts related business like appliance stores, lumber yards, plumbers, electricians and so on. Through the first six months, sales of new homes are down 15 percent. Sales of existing homes are down more than 30 percent.

Lincoln is not alone. The slowdown is nationwide. In some locations the housing industry woes are much more serious than in Lincoln.

But this is no time to try to solve a problem by throwing local tax money at it.

The city is cutting scores of jobs. It’s having a difficult time just scraping up money to keep the parks mowed.

Even if the city did have a few bucks in the treasury it would still be a bad idea to start subsidizing a narrow segment of business interests. Even duplexes would be excluded from the program, not to mention apartments buildings and commercial and industrial construction.

All businesses have cycles. History teaches that that the housing industry in Lincoln will rebound eventually without government intervention.

City officials have prodded and poked at this idea long enough. It’s time to move on. Surely City Hall can find better uses for the $610,000 than this misguided subsidy program.