Congressional Budget Office Proposal Could Further Damage Economy

Congressional Budget Office Proposal Could Further Damage Economy 
 
 
 It's a well known fact that a large part of the American economy is driven by housing, whether it be home sales, or construction.  And most Americans enjoy the mortgage tax deduction as way of offsetting the tax burden they bear every year.  
 
 Now the Congressional Budget Office has targeted the mortgage tax deduction as a means of stemming the deficits generated by Federal Governments out of control spending.  The recent stimulus packages and the proposed Health Care Reform package have driven deficits to new highs.  
 
 The CBO is now proposing to lower the mortgage interest deduction cap from $1 million to $500,000.  The second proposal would eliminate the tax deduction and replace it with a flat tax credit of 15% of the annual mortgage interest paid by consumers.  This could have devastating effects on home sales, but more importantly home construction which provides hundreds of thousands of jobs which have already been negatively affected by a weak economy.  If implemented, this could not only slow our economic recovery, but potentially throw it our economy into another downward spiral.
 
We all know how the Federal Government thinks, "start small, think big", it will simply be a matter of time before necessity would drive another reduction in the mortgage cap, and a reduction in tax credit.  How long do you think it would take for these trends to wipe out all deductibility of the mortgage tax credit?