A $15,000 homebuyer tax credit? For everyone?

Having already thrown the kitchen sink at housing without promoting the kind of stability they had hoped, our elected officials are now heading into the bathroom to grab the toilet.

Senator Johnny Isakson, a Georgia Republican and retired real estate broker, introduced a bill today that would raise the homebuyer tax credit to $15,000 and make it available to all buyers, regardless of income. Connecticut Democrat Chris Dodd is co-sponsoring the bill

"One of the biggest problems facing the American people today is an illiquid housing market, a decline in their equity, a decline in their net worth and a depression in the housing market that we are obligated to correct if we possibly can," Isakson said in a statement.

The problem with a tax credit that is available to everyone is that it will simply raise the price of homes -- effectively funneling cash from the federal government -- which is broke -- into the pockets of home sellers. If everyone who wants to buy a home now saves $15,000 on their taxes by buying a home, it will just drive up prices.

First-time home buyer tax credits might be defensible on the grounds that they give young people with limited resources a shot at the American Dream. But if everyone gets the tax credit, it starts to look like people who buy homes will be benefiting at the expense of everyone else, who will now have to share in picking up the tax burden abdicated by homebuyers.

The other problem with this bill is that it could have the effect of stifling the housing recovery for the rest of the year. The current $8,000 first-time homebuyer tax credit expires on December 31, and think about it: If this bill is going to pass, who would be dumb enough to buy a home before it goes into effect, since it explicitly states that it won't be applied retroactively?

The problem is that the real estate industry is the fourth largest campaign contributor in the country, so whatever they want, they'll probably get. It could spur some trade-up activity as people sell smaller homes to buy bigger ones -- and what could possibly be better for Realtors than that? Double the commissions, double the fun!

It's just unclear to me why the United States government should have to underwrite this pathetic prop-up effort.