The U.S. Senate, seeking to address the housing crisis blamed for the nation’s economic slowdown, backed a $24 billion plan that focuses on providing new tax breaks for home builders.
The chamber voted 84-12 to approve legislation providing tax cuts worth about $18 billion during the next 18 months for home builders, banks and other businesses affected by the subprime mortgage debacle. The bill offers about $6 billion in tax breaks, spending increases and other forms of assistance to individual homeowners.
The measure, which is opposed by the Bush administration, must be reconciled with a House plan that omits the business tax breaks in favor of more generous assistance to individuals. Lawmakers are debating how best to address a wave of housing foreclosures amid the worst housing slump in a quarter century. Foreclosures jumped 60 percent in February after reaching a record rate in the fourth quarter of 2007.
Senate Majority Leader Harry Reid, a Nevada Democrat, predicted today that lawmakers and the administration would overcome their differences and devise a compromise plan.
“This is the beginning of the process,” said Reid. “We could come up with a piece of legislation fairly quickly” meshing the House, Senate and administration proposals, he said. Reid added that he was “very satisfied” with a discussion yesterday with President George W. Bush regarding housing.
Aid to states
All 12 votes against the bill came from Republicans. None of the three presidential contenders — Democrats Hillary Clinton of New York and Barack Obama of Illinois and Republican John McCain of Arizona — voted on the plan. Both Clinton and Obama issued statements today criticizing the legislation for including the business tax breaks, which they said were unnecessary.
The Senate bill would provide aid to states, especially those with large numbers of unoccupied properties, while providing new tax breaks for those who buy foreclosed homes. In addition, it would allow 28 million Americans who don't itemize their tax returns to claim a property-tax deduction.
The bill would raise the Federal Housing Administration's loan limit to $550,000, boost funding for mortgage-counseling programs and tighten loan-disclosure requirements. Republicans blocked a proposal, opposed by the mortgage industry, that would have allowed judges to alter loan terms in bankruptcy court.
Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said that while he was unenthusiastic about some of the provisions in the bill, it was nevertheless a “positive step in the right direction.”
— Bloomberg News