Gingrich: Urban Sophisticates Don’t Understand Why Home Ownership is Important

Newt Gingrich, a conservative Republican bent on trimming government intrusions into business, and the National Association of Home Builders, a trade group that has for years lobbied to keep the feds in the business of housing, may seem like unlikely bedfellows. But presidential primaries often upend traditional roles.

The National Association of Home Builders, the country’s largest residential construction trade group, featured Mr. Gingrich at its “Rally for Homeownership” on Thursday in South Carolina ahead of the state’s Republican primary on Jan. 21. The purpose of the rally was to defend the idea of home ownership from “tax, legislative and regulatory schemes” that “are threatening to eliminate our nation’s long-standing commitment to home ownership.”

Specifically, the trade group is worried about potential policies that would eliminate the mortgage-interest deduction, which gives homeowners a tax break on their loan payments. More generally, the group wants to “make sure credit-worthy consumers and small businesses can get mortgages and loans,” and “help resolve the foreclosure crisis.”

In his speech, Mr. Gingrich pledged his support for the concept of home ownership and the mortgage interest deduction, and called for the repeal of the Dodd-Frank financial overhaul bill, which he said would jumpstart the housing market. He also promised, if elected president, to push for a 100% tax deduction for equipment expenses for manufacturing companies, which he said included builders, as part of his broader economic plan to promote businesses and job growth.

Apparently speaking to his suburban, middle-class base, he struck a populist tone: “Those who, you know, live in high-rise apartment buildings writing for fancy newspapers in the middle of town after they ride the metro, who don’t understand that for most Americans the ability to buy a home, to have their own property, to have a sense of belonging is one of the greatest achievements of their life, and it makes them feel like they are good solid citizens,” he told the crowd.

The irony of having Mr. Gingrich speak at such an event is that he is running for president as a fiscal conservative, which these days usually means opposition to the federal government’s backstopping the U.S. housing market. Government-sponsored companies Fannie Mae and Freddie Mac dominate the country’s mortgage market, guaranteeing about two-thirds of American home loans.

Mr. Gingrich, in a Dec. 29 debate, said that the lax lending standards during and heavy government involvement in the mortgage market were “a good case for breaking up Fannie Mae and Freddie Mac.”

That position would seem to contradict the builder association’s entire modus operandi, which is lobbying Congress to not limit government support of the mortgage market and housing industries. NAHB national officials declined to comment to Developments earlier this week, but they have a long track record of supporting Fannie Mae and Freddie Mac’s mandate to promote affordable housing.

Late last month, for example, as Congress debated an increase in fees from the GSEs to fund a payroll tax cut, the NAHB objected strongly, saying that such a move would “penalize millions of potential middle-class homebuyers by needlessly raising the cost of buying a home.”

A rich debate has raged over the last year over what to do about Fannie Mae and Freddie Mac, which have cost taxpayers more than $150 billion to date since being taken over by the government in 2008. Mr. Gingrich’s suggestion, of “breaking up” the companies, is typically understood to mean limiting or ending the government’s backstop of the mortgage market through the GSEs.

The candidate also brings additional issues to the debate, having worked as a “historian” for Freddie Mac after leaving Congress. He also drew scrutiny over his position on the companies’ importance.

A spokesman for Mr. Gingrich, Joe DeSantis, said in an email before the rally that the goals espoused by the organizers of the builder rally “are consistent with what Newt has said about the importance of home ownership and Newt’s policy platform,” but did not respond to follow-up questions about Fannie Mae and Freddie Mac specifically.

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