The Anti-multiplier

Be careful what you wish for. You may get it.

   Budget mavens are calling for an end to the mortgage interest deduction on tax returns as a way to help rescue federal finances. That's a political non-starter because it's too popular. But there's a far more important reason. Banning it would be an economic disaster, and here's why:
   Toppling the mortgage interest deduction would, domino-like, also topple many other pieces of the national economy.
   Consider. Without it, families would no longer be able to buy homes, since they rely so much on the tax break. As home sales drop, sales agents and brokers lose commissions. Renovators lose contracts. Movers lose shipments. As families decide to stay where they are, new home construction declines. As construction declines, lumber mills, plumbers, electricians and construction workers of all trades lose wages. As wages fall, retail sales decline. As retail sales dip, merchants lay off more workers. As sales in many fields drop, advertising also falls.

   The multiplier effect works both ways.