What a difference a few weeks makes. Just last month, the home building industry was lobbying for more substantial tax breaks for all home buyers and perhaps a government-subsidized mortgage rate buy-down to stimulate the devastated housing market. Neither materialized.

What the industry got was a flat-out wealth redistribution scheme that will not only not help the housing market but that will make it much worse.

Whatever political stripes one may wear, there is a simple, undeniable fact coursing through the pages of the budget proposal unveiled by President Barack Obama Thursday: It is a disaster for the housing business, and thus for the entire economy.

Set aside for the moment that the level of spending in the proposal and already underway in the various "stimulus" programs is quite likely to  lead to rampant inflation, destruction of the dollar, a prolonged depression and the reduction of the American economy to that of a third-world backwater. Buried in the text of the budget document is a reduction in the value of itemized deductions to middle-class and up taxpayers (yes, middle class--what the Administration calls middle class is actually working class). That includes real estate tax and mortgage interest deductions.

Its proponents will carry on about paying one's fair share and point out that the reduction only cuts the value of the deductions to 28% of their value from 33% or 35% currently and, by 2011, 39.6%. Don't think for a moment that if this thing gets passed that further reductions won't be in the offing, as will higher tax rates on everyone except the legions of minions who in absolute lockstep provided Obama with victory.

The National Association of Home Builders did not mince words in a statement Thursday on the changes to real estate tax deductibility. Attributed to NAHB chairman Joe Robson, the statement said:

"With the housing market still reeling from its worst downturn since the Great Depression, this is not the time to talk about raising taxes on home buyers and home owners. This proposal will increase the cost of housing for many middle-class families, particularly in high-cost areas such as California and the Northeast, which will only further undercut the housing market, exert more downward pressure on home values and work against the President's efforts to stabilize housing and turn this economy around.

"The proposed budget would also tax a —carried interest' as ordinary income, which could significantly impact the multifamily and commercial real estate sectors at a time when they are already experiencing a severe downswing. At this critical point in the recession, we should be doing everything we can to stimulate demand in housing and avoid proposals that would reduce housing affordability and further destabilize prices.

"The notion of —robbing Peter to pay Paul' just won't work. Not when the stakes are so high with our economy. This week alone, existing home sales dropped another 5.3% and new homes sales plunged 10.2%. Inventory of unsold homes is at an all-time high. Financing health care reforms by chipping away at the mortgage interest and real estate tax deductions is certainly not the answer. This will only hurt the ailing housing market and U.S. economy."

The National Association of Realtors was equally disparaging. Its president, Charles McMillan, put out a statement saying:

"There is never a good time to propose something that undermines the basic foundation of homeownership, but given our current housing crisis, this has to be the worst possible time."

"The tax deduction of interest paid on mortgages is both a powerful incentive for homeownership and one of the simplest provisions in the tax code. It should not be targeted for change."

"Bank balance sheets will bleed as collateral value of their mortgage-backed securities falls even farther. We can¹t afford another credit crisis before we resolve the current one."

The NAR said its estimates show that changing the mortgage interest deduction will impact home prices and values across the board.

The Obama budget proposal, as well as much of the Administration's action during the month that it has been in office, reveals that one of its guiding principles is a false notion of equality that exists neither in nature nor in the U.S. Constitution. There is no right, specified or even intimated, to economic equality, or even the gauzy concept of "fairness" invoked by those bent leftward. (For a less radical take on what the Administration is up to with this, check out housingcrisis.com.) 

The NAHB and its allies ought to express themselves through their PACs by withholding contributions from any politico who supports this package (and others like it sure to come from this Administration). Builders should quietly "educate" the employees they still have that a vote for anyone who supports this budget is a vote for future joblessness.

And all the rest of us would best be reminded that what happened in November was an election, not a coup d' etat.