Apparently, some Senate Republicans tried to get a tax-credit for new home purchases into the stimulus bill:
Seeking to jump-start the housing market, the Senate added new tax relief for homebuyers to its $900 billion economic stimulus bill yesterday as the legislation moved toward a final vote.
The amendment, offered by Sen. Johnny Isakson (R-Ga.), represents a significant victory for Republicans. GOP lawmakers have complained that the package includes few of their priorities for easing the economic crisis, including more help for the housing sector, which has been devastated by foreclosures and the frozen credit market.
The Isakson provision would offer a tax credit of up to $15,000 for any home bought as a primary residence, for one year after the stimulus bill is signed into law. It would add $19 billion to the plan.
Although Isakson ended up voting against the bill when it came up for a vote, his amendment was included in the Senate bill that was passed, and which is now the subject of controversy among House and Senate conferees:
As Senate and House negotiators hash out the details of a compromise on the economic stimulus bill, there’s no question that now in jeopardy are a few very popular items that popped up as amendments along the way.
For one, we’re told that the homebuyers’ amendment approved by a bipartisan voice vote last week may be out already. Republican Senator Johnny Isakson of Georgia proposed a $15,000 tax credit for buyers of new homes within a year or so of the bill taking effect. Initially, the cost was estimated at $18.5 billion, but has now been recalculated by the Congressional Budget Office at about $35.5 billion.
As Doug Bandow notes, though, Isakson’s tax credit is an atrocious idea for a more important reason than it’s cost:
The housing market bubble burst. It cannot be reinflated. The bust will be painful, but dumping more money into the market in an attempt to inflate prices will only slow the adjustment process. The pain is unfortunate, even tragic for some people, but inevitable
It was a the collapse of an over-inflated housing market that set off the crisis we are in today. Attempting to re-inflate that bubble and bring real estate prices back to where people think they “should” be is only going to delay the inevitable and may make things far, far worse.
H/T: The Other McCain