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The Economics of Polarization, or: Why the Tea Party Is Magnificently Right

October 31st, 2011 - 2:26 pm

Here’s one result that I found remarkable: It shows the aggregate property taxes paid to state and local governments, against aggregate mortgage payments (the outstanding volume of mortgage debt multiplied by the current mortgage rate). The result is somewhat exaggerated, because about a third of property tax collections are commercial rather than residential, but it’s still compelling: the property tax burden on homeowners is now roughly equivalent to the interest burden on their mortgages!

 Property taxes vs home mortgage interest (mortgage debt outstanding multiplied by current mortgage rate), in $US billions

Source: Census Bureau, Federal Reserve

And the liberal press wonders why the Tea Party is saying, “Enough is enough!”

In 1934, when President Roosevelt devalued the dollar against gold, J.M. Keynes famously wrote in the Daily Mail, “President Roosevelt is magnificently right.” Careful analysis of the numbers leads to the same encomium for the Tea Party.

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