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Home General News Real Estate Industry Articles Senate Adds Homebuyers’ Tax Cut to Stimulus Measure
Senate Adds Homebuyers’ Tax Cut to Stimulus Measure PDF Print E-mail
Written by By Brian Faler   

The U.S. Senate voted to cut taxes on homebuyers and weaken “Buy American” provisions in an economic stimulus package that tops $900 billion and might come to a vote as soon as today.

Lawmakers, aiming to boost the ailing housing industry, yesterday unanimously approved a Republican amendment that would temporarily offer homebuyers a tax credit worth $15,000 or 10 percent of a home’s purchase price, whichever is less. The plan would cost $18 billion.

Senator Johnny Isakson, a Georgia Republican who sponsored the amendment, said it was critical to pulling the economy out of the worst recession in decades. “If we don’t fix housing first, it doesn’t matter what else we fix,” Isakson said.

Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said today that lawmakers hope to complete work on the plan tonight, while Majority Leader Harry Reid of Nevada urged Republicans not to use procedural moves to delay a vote into the weekend.

Dick Durbin of Illinois, the Senate’s second-ranking Democrat, said the bill won’t pass without support from at least a “handful” of Republicans.

“If this ends, sadly, with the same result as in the House of Representatives, with no cooperation and no involvement by the Republican side, then this economic crisis sadly will continue. We can’t afford to let that happen,” Durbin said.

The Senate version would have to be reconciled with an $819 billion House measure. Democratic leaders want to get a final measure to President Barack Obama’s desk by the end of next week.

Obama again urged lawmakers, this time in a column in the Washington Post, to wrap up work on the bill. “Every day, our economy gets sicker -- and the time for a remedy that puts Americans back to work, jump-starts our economy and invests in lasting growth is now,” he wrote.

Obama disputed Republican complaints that the plan doesn’t include enough tax cuts and has too many long-term initiatives that won’t quickly boost the economy. He said he rejects “the notion that tax cuts alone will solve all our problems; that we can meet our enormous tests with half-steps and piecemeal measures.”

Senators voted yesterday to stipulate that the bill’s “Buy American” restrictions must be carried out in a way consistent with the nation’s trade agreements. The bill had required iron and steel used in projects funded by it be made in America. These provisions drew protests from foreign leaders and Obama, who said the restrictions could spark a trade war.

In what Democrats called a compromise, the Senate approved by voice vote an amendment saying the provisions shall be “applied in a manner consistent with United States obligations under international agreements.” A proposal by Arizona Republican Senator John McCain to delete the “Buy American” provisions was defeated, 65-31.

Democrats, who control the Senate with 58 votes, will have to win over at least a few Republicans to overcome procedural hurdles requiring 60 votes to keep the bill from stalling. Obama met yesterday with two Republicans, Maine Senators Olympia Snoweand Susan Collins, who may prove critical to passing the legislation. Both are pushing to strip billions from the plan, spending they say would do little to create jobs.

Snowe said she gave Obama a list of potential cuts, which she said she would like to see total “upwards to $100 billion.” She said Obama was “very amenable” to the suggestions.

“He’s prepared to be receptive to the ideas and to re- evaluating some of the spending measures,” Snowe said. “We really do need to remove those items that have nothing to do with the purpose of jump-starting the economy.”

Collins, who said she preferred a stimulus package totaling about $650 billion, said Obama made a “very strong pitch to have a bill that is considerably bigger than what I might like and argued that the economy is sufficiently troubled that legislation has to be large enough to have the kind of impact that we all want.” She said she is “committed to trying to get to a yes vote.”

Lawmakers are pushing amendments tied to the meltdown on Wall Street. Senator Ron Wyden, an Oregon Democrat, said he and Snowe will offer one aimed at financial institutions that take money from the government’s Troubled Asset Relief Program. Under the amendment, those companies would have to repay the cash portion of bonuses topping $100,000 that were paid to employees for work last year.

“It’s not enough to say these bonuses are wrong,” Wyden said. “They must be paid back.”

Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said he will offer an amendment requiring that at least $50 billion of the TARP money be used to stem housing foreclosures.

This amendment would secure, I think beyond any doubt, that those resources that I’ve identified here would be allocated for foreclosure mitigation,” he said.

Lawmakers previously voted to aid the auto industry by giving new car and truck buyers a tax break on sales taxes and interest payments on car loans. They also voted to boost funding for medical research at the National Institutes of Health by $6 billion.