We spend around $100 billion a year on this subsidy, and to the extent that it’s defenders are correct and homeownership does have positive externalities, it is actually making urban areas worse off.Ozimek recommends replacing the MID with a subsidy on down payments. That sounds all well and good from a policy perspective, but I just can't see that happening. Basically, it would involved a huge number of current homeowners paying more money each year in exchange for granting a break to future homeowners. I don't know the actual numbers, but I'm guessing that current beneficiaries of the MID make more money, are more likely to vote, and are greater in number than those likely to initially benefit from a down payment subsidy. Besides, those currently benefiting from the MID will fight tooth-and-nail to keep it and would likely heavily punish any party that proposed eliminating it.
Subsidies, even ones that do not serve any clear public good, are incredibly hard to get rid of. Keep in mind that we still have a National Helium Reserve, which was built in 1925 to ensure our success in the impending blimp war with Germany.