Senate Considering Cap on Home Interest Deduction

Senator Tom Cockburn, a conservative from Oklahoma, says an end to the homeowner's deduction for homes over $500,000 in value is on the table.

The conversation about changing the mortgage deduction policy was sparked again this month, when the Obama administration released its plan for winding down the government-sponsored mortgage giants Fannie Mae and Freddie Mac. Though the report didn't offer specifics on the mortgage-interest deduction, it did note that the deduction had encouraged investment in housing "over other sectors in the economy."

The purpose of the mortgage-interest deduction is to encourage people to buy homes, with the idea that homeowners take better care of their property, contribute more to their neighborhoods, and can build wealth.

But some argue that the government shouldn't subsidize homeownership. The government pushed homeownership hard in the 1990s and early 2000s, and some of the borrowers who got homes couldn't really afford them. Most experts agree that this was one of the causes of the financial meltdown.

Cockburn was appearing on the nationally syndicated Hugh Hewitt radio program.