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What is the government’s involvement? Essay (Article)


The American dream of owning a home is slowly turning into a dreaded concept with all the hardships it brings along with it. Many people have taken mortgages in order to buy houses simply because the incentives given to them by the government are very lucrative.

The federal government has promoted home ownership through programs that entail “tax incentives for first-time buyers and mortgage interest deductions” (Depaul 1). Mortgage interest deduction though beneficial to home owners, will have a heavy toll to the tax revenue. Future projections have shown a “$131 billion” reduction in 2012 (Depaul 1).

However, the polls carried out by Allstate/National Journal/Heartland Monitor show that the Americans are divided concerning whether the government should continue with these programs or not (Depaul 1). Current statistics prove that home ownership is on the decline.

Why is home ownership decreasing?

As of February 2011 there were only 250,000 sales made which is a “record low” and this translates to a 16.9% decline in the “annual rate of new single-family home sales” (Depaul 1).

There have been different views expressed by experts and analysts some of whom have attributed this decline to: “uncertainty in labor market, falling home prices, tight credits and high unemployment” (Depaul 1). Tom Wilson, Allstate Chairman and CEO, claimed an imbalance between demand and supply.

Though the government had all good intentions in encouraging home ownership, this has had a negative impact on some families. It is known that as a result of mortgages, there is increased debt and also “soaring foreclosure rates” which in general destabilizes the community. Deliberations are still being made on the best course of action to be taken.

What is the way forward?

Jared Bernstein, chief economist and advisor to Vice President Joe Biden, commenting on the issue of governments’ involvement, suggested that government-sponsored enterprises (GSEs) should be reduced and that the government’s contribution should have been one that encouraged a more “sustainable home ownership” and not creating more problems for the individuals and even the economy.

A unanimous agreement by other panelists was that mortgage- interest deductions should not to be altered at the moment until the housing market is a bit stable. Pete Domenici and Alive Rivlin together in their report on “deficit reduction” suggested that mortgage interest deduction be applicable to loans under $500,000 only.

Henry Cisneros, “a former Secretary of the Housing and Urban Development and a member of the Domenici-Rivlin Debt Reduction Task Force” (Depaul 1) on the other hand proposed “replacing the mortgage deduction with a refundable 15% credit” (Depaul 1). He also added that changes on mortgage interest deduction were mainly going to be influenced by the Congress and that he only expects changes to the “home interest mortgage” and not its elimination.

Personal opinion

Individuals, in America and elsewhere should cultivate a saving culture in order that when the appropriate time comes, then one can easily purchase the home of their choice.

This will even ensure that they do not incur any debts as in the case of obtaining mortgages and they will even be protected from the increasing foreclosure rates. When one starts to save earlier in life, then the American dream will definitely become a reality, free of debt.

Work Cited

Depaul, Jennifer. Homeowner Tax breaks; Here Today, Gone Tomorrow? The Fiscal Times, 2011. Web. <>

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IvyPanda. (2019, October 12). What is the government’s involvement? Retrieved from https://ivypanda.com/essays/what-is-the-governments-involvement/

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"What is the government’s involvement?" IvyPanda, 12 Oct. 2019, ivypanda.com/essays/what-is-the-governments-involvement/.

1. IvyPanda. "What is the government’s involvement?" October 12, 2019. https://ivypanda.com/essays/what-is-the-governments-involvement/.


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IvyPanda. "What is the government’s involvement?" October 12, 2019. https://ivypanda.com/essays/what-is-the-governments-involvement/.

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IvyPanda. 2019. "What is the government’s involvement?" October 12, 2019. https://ivypanda.com/essays/what-is-the-governments-involvement/.

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IvyPanda. (2019) 'What is the government’s involvement'. 12 October.

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