The real-estate industry logically prefers a protected market to a free one. It argues that capital would drain out of housing. "This is antihousing," says Jerry Howard, chief executive of the National Association of Home Builders. "You will do some serious damage to states with strong vacation economies." You can see why home builders are upset: their margins are fattest on luxury homes; a policy that pushes prices toward the middle, as egalitarian as it might sound, would end their party.

But tax policy was never intended to function as a price support. Even less should it support a putative housing bubble. Even the president's directive mentioned sustaining housing ownership — not sustaining housing prices. High prices may even be a disincentive to ownership. And the housing market, the panel concluded, is overcapitalized anyway. Thanks to the interest deduction and other breaks, the effective tax rate on owner-occupied real estate in the U.S. is estimated to be only a fraction of the tax on business. Some of the capital being plowed into McMansions with Olympic-size lap pools would earn a higher return (tax considerations aside) in medical research or pollution control.

From 2006 and probably even more to the point today.