Ken Harney — author of the nationally syndicated “The Nation’s Housing” column — has a worthwhile analysis of the Congressional budget “supercommittee” and its task of knocking $1.5 trillion off the federal deficit. (Click here to read it courtesy of KW Elite Team. Inman subscribers can read it here.)

Of particular interest is the fate of the mortgage interest deduction. Writes Harney:

[T]he influential, bipartisan private-sector Committee for a Responsible Federal Budget … offered several options on the mortgage interest deduction, including elimination of second-home interest write-offs outright, capping the primary home mortgage interest deduction at $500,000, and turning it into a credit.

Over a 10-year period, the group estimated that by limiting mortgage interest deductions and other itemized write-offs for high earners — presumably those with household incomes above $250,000 or individual incomes above $200,000 — it could knock $250 billion off the deficit.

It’s hard not to look at potentially saving a quarter of a trillion bucks. But any solution has to be something that can pass both houses, and even with that bi-partisan supercommittee, that could be a tough job.

The strategy, Harney suggests, will involve spending cuts and only “modest” changes to taxes: “[N]o changes to the primary home MID, but possibly a phase-out or restrictions on the mortgage interest deduction for second homes” while lowering tax brackets.

There are other things on the table, such as eliminating the deduction for state and local taxes (a potential $470 billion), but anything big would be delayed until after the 2012 elections.

And yes, it pretty much has to happen. Besides the basic idea “If you want stuff you have to be able to pay for it,” the same bill that raised the debt ceiling also mandates deep cuts in defense and Social Security in 2013 if this supercommittee can’t get a plan past both houses of Congress.

Harney’s conclusion: While there doesn’t seem much risk of the MID being eliminated of phased out,

comprehensive tax reforms — reducing marginal rates for individuals and corporations, capping the mortgage interest deduction or turning it into a far less valuable tax credit and phasing out property tax write-offs — are very much on the agenda for 2013, no matter who wins the election.

Click here to read the whole piece.