Ahead of Convention, GOP Dumps Mortgage DeductionBy
Political party nominating conventions are expected to present warm, glittery narratives about a presidential candidate and to signal that the country is in full-on election mode.
The media tend to pay far less attention to another party ritual: the adoption of official platforms assembled by a select group of delegates and voted on at the conventions. These are statements of a party’s principles and are often so long—and so generic—that no one save die-hard political wonks pay them much mind.
A dive into wonkland provides a lesson in what a party’s leaders really think about various issues. The GOP platform is already extremely socially conservative. For example, it carries an anti-abortion plank that has no exemptions for rape, incest, or even to save the life of the mother. But in the past week, activists pushing the Republican Party to the right on fiscal matters have been gaining traction.
On Aug. 20, Republican presidential candidate Mitt Romney called for an audit of the Federal Reserve. His announcement is meant to appease Tea Party activists and supporters of Rep. Ron Paul, the Texas Republican who faced off against Romney in the primaries. They have been threatening to mount an insurgency during the convention if Paul’s positions aren’t adopted.
Romney has not been entirely clear where he stands on the issue. He hasn’t officially endorsed Paul’s “audit the Fed” bill. Romney’s economic adviser, Columbia Business School dean Glenn Hubbard, has called the bill “trouble.” But Romney’s running mate, Rep. Paul Ryan of Wisconsin, has supported the Fed audit bill, which passed the House, and it is already on a number of party platforms at the state level. If the party does not incorporate his positions at the Tampa convention, Paul warned recently: “I would think some of my supporters would be annoyed and feel strongly enough to take it to the floor under the rules.” Romney’s statement in favor of an audit pressures the national platform committee to take heed of Paul.
While Romney was caving to pressure from Paul supporters, the platform committee itself made a surprising move. The GOP refused to put itself on record as supporting the mortgage interest deduction, writes my Bloomberg News colleague James Rowley. The idea is that Romney’s tax plans rest on eliminating deductions and loopholes he has not specified, so the party wants to give a President Romney ample room to maneuver by taking interest on mortgages off its protected list. However, on the same day, the platform group voted to retain its support for deductions granted to charitable donations.
The mortgage interest deduction is the nation’s largest tax benefit. The government forgoes about $90 billion per year to the millions of American homeowners that claim it. It is cherished by the middle class, and some economists consider it the bedrock of the housing market. The mortgage interest deduction has many critics, but by virtue of its popularity among voters, killing it would amount to political suicide. That’s why you’ll find plenty of politicians who advocate getting rid of tax credits and loopholes, but you’d be hard-pressed to find a single one publicly opposing the mortgage interest deduction.
Four years ago, Republicans were clear in supporting the credit. In the 2008 party platform (PDF), officials wrote: “Because affordable housing is in the national interest, any simplified tax system should continue to encourage homeownership, recognizing the tremendous social value that the home mortgage interest deduction has had for decades.”
Now the party has changed tack. The question is whether the political fortunes of those who sign onto the platform will benefit from this.