RACHEL MARTIN, HOST:
Let's return now to our recurring series called Reporter Hotline. This is where our reporters answer your questions about issues in the news. With the presidential campaign in the final stretch, we're going to focus today on the candidates and their policies on housing and taxes.
NPR business correspondent Yuki Noguchi and White House correspondent Scott Horsley are with us and we'll start first with Yuki.
Yuki, what can you tell us, generally, about how President Obama and his Republican challenger, Mitt Romney, differ in their assessment of the housing problem?
YUKI NOGUCHI, BYLINE: Well, I'm not sure their assessment of the housing problem differs. But on paper, their policy prescriptions are pretty similar. Mr. Romney likes to talk about selling off Fannie Mae and Freddie Mac's foreclosed homes, as well as winding down those institutions. And, in fact, the Obama administration is in the process of doing that.
The one major difference is a question of financial regulation. And the president is a strong supporter of the Dodd-Frank financial regulations, which include a lot of strong consumer protections for homebuyers. And Mitt Romney wants to roll back some of those Dodd-Frank regulations, although he hasn't specified which parts. And he likes to mock the attempts to simplify the mortgage forms, saying that basically the new rules are more complicated than the old ones.
MARTIN: We got a question from Mark Copeland, of Chicago, Illinois, on this. This bit from Mitt Romney at this past week's debate caught his ear.
MITT ROMNEY: I will eliminate all programs by this test, if they pass it: Is the program so critical it's worth borrowing money from China to pay for it? And if not, I'll get rid of it.
MARTIN: And, Mark asks, quote, "Under this litmus test, which federal housing programs will you eliminate? Please be specific," he's asking of Mitt Romney. What guidance can you give Mark, Yuki?
NOGUCHI: OK, so let me back up. Currently, there are several housing programs. There's HARP, which is the refinancing program, and HAMP, the mortgage modification program. And then Obama administration also backs plans that allow homeowners to refinance even if they're underwater, which is to say that they owe more on their home than their home is now worth. And they also support some forms of loan forgiveness.
Mr. Romney's campaign has not been specific about which of these programs he'll keep or which he may scrap. Last year, he said in an interview that he believed the foreclosure market should be allowed to hit bottom, so that private capital can come in. And many people heard that and thought it was just sort of critical of all government intervention designed to prevent foreclosure.
The campaign has backed away from that. And they told me recently they do support some forms of foreclosure alternatives. Although, again, no specifics about which of those alternatives they prefer. They say they believe the administration has run HAMP and HARP poorly, and they would do a better job of running. That which suggests they would keep them in some form.
But they also say the overriding fix for housing has more to do with improving the economy and the jobs picture, which they say will solve the housing problem.
MARTIN: NPR business correspondent, Yuki Noguchi shedding some light on the housing problem. Thanks so much, Yuki.
NOGUCHI: Thank you.
MARTIN: Now, let's turn to taxes. NPR White House correspondent Scott Horsley is here to answer some of your questions.
SCOTT HORSLEY, BYLINE: Hey, Scott.
MARTIN: So let's start with a question about Mitt Romney's tax plan.
DARREN THIESEN: My name is Darren Thiesen and I'm from Rathdrum, Idaho. I do have questions if Romney ever does plan to, before the election, actually come up with specific loopholes, specific things that he would like to cut, because he's been vague on that the whole time.
HORSLEY: Well, Darren's right. Governor Romney has been vague about the loopholes he would close in order to offset the lost revenue from lowering tax rates. So in the absence of those details, fiscal analysts have had to do some guesswork. One independent study that President Obama often sites looked at what high-income people would save if their marginal tax rate were lowered by 20 percent, and then looked at all the tax breaks high-income people currently get. And concluded, even if you took away all their tax breaks, the rich would still end up paying less.
Now, that's assuming you didn't do away with tax breaks for savings and investment. But if you did that, and the rich paid less, then the only way to keep government revenues steady, as Governor Romney said he wants to do, would be for middle-class families to pay more. The governor argued that if that's how the numbers worked out, he'd simply change his plan to make sure the deficit doesn't go up and that the relative tax burden on the wealthy doesn't go down.
MARTIN: And so, what would President Obama do differently?
HORSLEY: Well, President Obama starts by saying he wants to make the tax code more progressive. That means the share of tax burden paid by the wealthy would increase. Beyond that, he says he's open to reforming the tax code; lowering rates and doing away with loopholes, which everyone says would make it more efficient.
But he doesn't start with a goal of cutting rates by 20 percent. His thinking is if your goal is to get out of a deficit hole, you don't start by digging it deeper.
MARTIN: We want to move now to a question from Ian Gard, who wrote on our website. And essentially, Scott, he wants to know why there are so many loopholes in a tax policy to begin with.
HORSLEY: Well, the thing is, if you want to encourage some kind of behavior - whether it's going to college or buying a home or building a factory - both Democrats and Republicans have found it a lot easier to sell that program as a tax break than, say, a direct government grant; even though from an economic point of view it's pretty much the same.
So, over the last few decades, the tax code has become the vehicle for a whole lot of government policy. Some of that policy, perhaps very worthwhile, but it's made for a very inefficient tax system.
MARTIN: OK, one last question, Scott. This one about taxes and how they relate to entitlement programs. Let's take a listen.
BILL SHIPLEY: My name is Bill Shipley. I'm from Chicago. I'd like to know what the candidates' positions are on raising the income cap on payroll taxes, given that these are the primary source of funding for Social Security and Medicare?
HORSLEY: Well, it's an interesting question, you know, because our income tax system is somewhat progressive. But payroll taxes for Social Security are flat to regressive; you pay the same rate on every dollar of income up to about $110,000. And beyond that, you pay nothing. There's no such cap on the portion of the payroll tax that goes for Medicare, by the way.
Another way that President Obama has addressed this idea specifically - though I suspect it's something he might be open to. He did rely on an extra payroll tax of about 1 percent for the wealthy to help fund his health care plan. That only kicks in, though, at the $200,000 level, not $110, 000, because, of course, he promised back in 2008 not to raise taxes on anyone making less than $200,000.
MARTIN: NPR's White House correspondent Scott Horsley. Scott, thanks so much.
HORSLEY: My pleasure, Rachel.
MARTIN: Next week, we're going to tackle your questions on health care. If you're wondering where the candidates stand and how their policies differ, send your questions to ReporterHotline at npr.org. Please include your full name and a phone number we can reach you on. That's Reporter Hotline, all one word, at npr.org.
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