On today's edition of his radio show, Glenn Beck claimed that with his new deficit reduction plan, President Obama is trying to engineer the "biggest land grab in the history of the planet." Beck's theory is that the government of the United States is attempting to seize American homes and banks by limiting mortgage interest reductions in taxes.
According to Beck, President Obama is attempting to "get rid of those mortgage deductions" to force Americans to default on their mortgage loans, allowing Fannie Mae and Freddie Mac to make the "biggest land grab in the history of the planet." The defaulted loans would also cause banks to collapse allowing the government to take them over.
The conspiracy theory leads to one of Beck's favorite destinations, with Beck comparing what the administration is doing to Germany and National Socialists: "The only thing they'll have left to back the dollars with is, oh my gosh, land. Oh wow. That's what they did in Germany when the Mark was over, the Deutschmark, they had to go to the German Mark, and what did they do? They just backed the new money with the land that all the National Socialists grabbed."
In fact, Obama is not proposing that we eliminate mortgage deductions. He proposes to limit the deduction and those limits would only apply to the top 2% of America's wealthiest individuals by limiting their itemized deductions. From President Obama's April 13 speech on deficit reduction:
Beyond that, the tax code is also loaded up with spending on things like itemized deductions. And while I agree with the goals of many of these deductions, from homeownership to charitable giving, we can't ignore the fact that they provide millionaires an average tax break of $75,000 but do nothing for the typical middle-class family that doesn't itemize. So my budget calls for limiting itemized deductions for the wealthiest 2 percent of Americans -- a reform that would reduce the deficit by $320 billion over 10 years.
Does Beck really think that a cap on the wealthiest Americans' itemized tax deductions will really lead to a massive wave of default?
The Administration's plan will wind down Fannie Mae and Freddie Mac and shrink the government's current footprint in housing finance on a responsible timeline. The plan also lays out reforms to continue fixing the fundamental flaws in the mortgage market through stronger consumer protection, increased transparency for investors, improved underwriting standards, and other critical measures.