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Bring back the 3 percent mortgage: RFK’s plan to level the economic playing field

Democratic presidential candidate Robert F. Kennedy, Jr. has shown an impressive gift for policy innovation. Recently, he began to roll out his economic plan which would, among other things, level the playing field for working-class Americans seeking to buy a home.

As Kennedy points out, there has been a shift of $4 trillion in wealth since 2020 from the working class to the super-wealthy in the U.S. This is in part because of inflation. The average annual wage today is $5,000 less than the cost of basic human needs of food, transportation and housing. 

Fifty-seven percent of American families would not be able to come up with $1,000 cash in an emergency. Personal credit card debt has hit record levels, now topping $1 trillion. Homeownership among the middle class, always the bedrock of equity and advancement in the U.S., has been in a steady decline since the financial crisis of 2008. 

Just since 2020, the cost of the average home in the U.S. has risen by 46 percent, to well over $400,000. Meanwhile, interest rates on home loans have spiked from below 3 percent to a current average of more than 7 percent.

At the same time, giant corporate entities such as BlackRock, State Street, and Vanguard have stepped up their effort to corner the residential real estate market by swooping in to buy vast numbers of homes with cash offers. As of this spring, one study showed large corporations on track to own 40 percent of single-family homes in the U.S. by 2030. These companies have now shifted resources into an additional business model of built-to-rent homes that also threatens to undercut private home ownership. In practical terms, this puts home ownership beyond the reach of millions of struggling Americans. 

Kennedy’s proposal would change the tax code to disincentivize the corporate takeover of the residential real estate market while guaranteeing government-backed mortgage interest rates of 3 percent for millions of buyers.

Because the program would be financed by tax-free bonds, purchased by investors and only backed by the U.S. government, the cost to the taxpayer would be minimal. This would reduce average mortgage payments by around $1,000 per month, a huge boon to first-time homebuyers and all working-class Americans seeking to buy a home.

“If you have a rich uncle who will co-sign your mortgage,” Kennedy explains, “you can get a much lower rate, because the bank will base it on his credit rating rather than yours. So I’m going to give everybody a rich uncle, Uncle Sam, who will guarantee mortgages for first-time single-family homebuyers at 3 percent interest.”

Back in the 1930s and 1940s, innovations in housing policy perfected the thirty-year amortized mortgage, introduced government-backed mortgage insurance, and supported developers building good and affordable homes. The results included a marriage boom, a baby boom, and a remarkable expansion of the middle class. The Kennedy plan should encourage a new round of family-centered social renewal.

In addition to making homeownership more attainable, Kennedy is rolling out policies that will rebuild the small business economy, re-shoring high-paying manufacturing jobs back home, boosting the minimum wage to $15 an hour, reining in healthcare costs, and controlling the flood of immigrants across the southern border to counteract the depression of working-class wages.

He also proposes making passport cards free for every American, which would eliminate the credit disadvantage of the working poor who do not possess a federal photo identification.

The U.S. will not survive with a system that serves only the interests of the elite class at the expense of a growing underclass that has no ownership stake in society. We must find our way back to an economy that works for the benefit of all, not just the super-wealthy. Kennedy has demonstrated that he understands this fundamental truth.

Allan Carlson is the founder of the World Congress of Families project and the author of several books on the history of the American family.

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