The government's extensive housing subsidies have offered the economy more problems than solutions, says Michael Milken, chairman of the Milken Institute.

Writing in The Wall Street Journal, he cites three negative outcomes.

1. The largest housing price bubble in American history. Housing prices dropped in about half the years since 1890, according to data from Yale University economist Robert Shiller, Milken says.

"Nevertheless, in the housing-boom decade before 2007, many buyers decided that the largest-possible house (with an equally large mortgage) was a better idea than a retirement fund or their children's education," he writes.

2. Misguided economic priorities. U.S. mortgage holders receive bountiful tax benefits, loans that include no recourse against borrowers' non-residential assets if they walk away, and loans that offer no protection for the lender if the borrower refinances the loan for a lower rate, Milken says.

3. Damage to the environment and public health. The size of the average American house grew by more than 50 percent over the last 30 years, while the number of people in the average house declined, Milken says.

With larger homes, "construction, heating, cooling, landscaping and extended commutes consume more natural resources," he writes.

Norbert Michel, a research fellow at the Heritage Foundation, argues that mortgage agencies Fannie Mae and Freddie Mac should be shut down.

"Removing the government guarantee from housing finance would likely bring lower housing costs, less personal debt, and higher personal income and savings," he writes in The Wichita Eagle.

"The government guarantees we’ve had in the U.S. housing market have distorted housing prices, encouraged debt, left taxpayers on the hook for trillions, and provided the impetus for millions of home foreclosures."

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