A final, post-subprime bust kick in the crotch from the IRS

If your house gets repoed because you can’t keep up on a mortgage, the IRS
wants to tax the amount of the debt you had eliminated.

Foreclosure is one way that beleaguered homeowners can fall into this tax trap. The other is when homeowners are forced to sell their homes for less than the value of the mortgage. If the lender forgives that difference, they are liable for income taxes on that amount.

The 1099 shortfall, as it is called, stems from an Internal Revenue Service policy that treats forgiven debt of all types as income even if the taxpayer has nothing tangible to show for it, unless the debt is canceled through bankruptcy.

The Center for Responsible Lending expects that 20 percent of the home loans made in 2005 and 2006 to people with weak credit, commonly called subprime loans, will end in foreclosure. Because so little money was required as a down payment during the boom, the value of many of these houses may be less than what is owed.

Some people in this predicament are fighting the I.R.S. and winning. Sometimes, lower payments can be negotiated with the I.R.S., tax experts say.

In other cases, bankruptcy or a claim of insolvency can eliminate the tax burden.

Even though you may have some legal recourse, in general, this is ridiculous and non-sensical. And, it’s punitive, as well as being stupid.

It will also contribute to more of an economic downturn, taking more money to buy things out of peoples’ pockets.

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Schlozman out at Department of "Just Us"

Bradley Schlozman has resigned, sneaking out last week, his exit unannounced. An exit like that is truly an embarrassment for such a high-profile Loyal Bushie. That is called leaving not with a bang, but with the proverbial whimper. Schlozman skulks away a pariah in the legal community, an abject failure, having seen his grand voter suppression schemes blow up in his face, revealing to the entire world that he is nothing more than a gormless cheat. (Rather like the much ballyhooed and terribly overestimated Karl Rove.)

I take personal the truncation of the Department of Justice. The feckless Schlozman was the U.S. Attorney in my city, installed without a Senate confirmation after Todd Graves was wrongly fired. From that position, Schlozman abused his power to derail the political career of Katherine Shields, a prominent Kansas City Democrat. He replaced the ninth fired U.S. Attorney, Todd Graves, who was very much John Ashcroft’s man, and had a sense of right and wrong, and refused to tamper with elections. Schlozman had no such qualms of conscience. He came to us from the Voting Rights Division, where his purpose was to suppress the rights of groups that were likely to vote for Democrats. One of the most revolting schemes he cooked up was the caging strategy that was used to deny African American members of the armed services their Constitutional right to vote. He and fellow political operative Hans Von Spakovsky schemed to politicize the hiring process for career Justice Department officials and eviscerate the Voting Rights Division. They were successful in doing so, but at steep cost. Throughout the Justice Department, positions remain unfilled. People simply do not want to work for the Department in this politicized environment, feeling that any connection with the Gonzalez Department of Just Us would be a kiss of death to a career they want to see continue past January 2009.

Schlozman is merely the latest perjuring rat to desert the sinking ship that is the Gonzalez Just Us Department. He is the latest hack to leave, joining Goodling, Sampson, Taylor, McNulty, Elston, and Mercer…just off the top of my head.

Like the others, he will not be missed. This is just more good riddance to bad rubbish.

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Bradley Scholzman Moves On

We have blogged about Bradley Schlozman at least 17 times. I have spent seemingly endless hours researching his activities at the Department of Justice. His work in the field of voter suppression was ground breaking. His tireless struggle on behalf of the Republican party in the last election was the stuff of legends. Just imagine what it took to throw away the manual in order to throw the book at the ACORN four just before the November election. A more loyal Bushie couldn't be found. When he had a chance he made sure the right kind of Republicans were hired or promoted. I blogged about Bradley Schlozman until I became ill with the entire mess Karl has made of our Department of Justice.

Imagine my mixed emotions when I read at TPM that

Reached on his cell phone today, Schlozman confirmed that he'd left the Department last week, but refused to say anything more and then hung up.

Goodbye Bradley. I will miss you. I am sure there is a tenured position awaiting you at Regent Law School.

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The Great Recall Of China

Here is tonight's funny. Toward the end there is a really serious point involving Erin Burnett. Pay close attention. You might miss it. The Daily Show. Jon Stewart. August 17, 2007. Need we say more.

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Edwards’ subprime talk isn’t convincing

Especially since he was first informed that his former employer and still invested private equity firm, Fortress Capital, owned not just one but two subprime lenders, back in May. And claiming there’s a difference between subprime loans and predatory ones is laughable.

Update: Let me specify that I agree with David, in comments, that not all subprimes are predatory. But, Edwards could arguably be seen as claiming none of them are, and that's just not true. Subprimes being extended to people like Katrina victims who may not even know yet how much their insurer is going to pay on a 60-year-old house seems pretty predatory to me.

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Campaign Video of the Day -- August 20, 2007

Sorry I am a little late this morning. I had an early appointment. Today's campaign video is Joe Biden's new one minute television ad. Introduced just yesterday, the ad was produced by JoeBidendotcom.




The runner up video today is Biden's 30 second spot called "Cathedral." It was also introduced yesterday. You should watch both.

If you have a video you think we should feature as campaign video of the day, please send an email to proctoring.congress@gmail.com subject: Campaign Video of the Day.

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