Mortgage-interest tax break may face ax
Bipartisan deficit-cutting panel puts deduction on table
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — The hugely popular mortgage-interest tax deduction could be targeted by a bipartisan commission charged with finding ways to chop the deficit, according to a report published Monday.
The Wall Street Journal reported that the mortgage-interest deduction, child tax credits and payment for health insurance with pretax dollars all could be put in jeopardy by the deficit commission, which is to issue recommendations on balancing the budget by 2015.
The report, citing people familiar with the matter, indicated that these tax breaks could be preserved at a lower level. Defense spending and a freeze on domestic discretionary spending also are being weighed, the report said.
Medicaid and Medicare changes are unlikely, and the commission has decided that Social Security changes wouldn’t have an impact for at least a decade because changes would have to be phased in.
The commission is facing a Dec. 1 deadline.
No matter what is proposed by the commission, led by former Republican Sen. Alan Simpson and Erskine Bowles, a chief of staff in the Clinton White House, Congress still may be loath to take the ideas on board. The banking and real-estate lobbies in the past have aggressively fought efforts to target the mortgage-interest deduction.
Officials need to find roughly $240 billion in annual savings to balance the budget by 2015, even when interest payments on debt are excluded.
In the last budget, the deficit was $1.29 trillion, the second highest in history. See earlier story on budget deficit.
President Barack Obama formed the National Commission on Fiscal Responsibility and Reform in February.
Steve Goldstein is MarketWatch's Washington bureau chief.
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