Dems Split On How To Ease Housing Crisis

House Leaders Target Aid To Homeowners As Senate Plan Showers Tax Breaks On Businesses

(AP)  Democrats are split over how to respond to the housing debacle, with House leaders focusing on helping homeowners facing foreclosure while the Senate moves to take care of businesses impacted by the subprime crisis.

The Senate could pass its bipartisan, business-friendly measure, which showers some $25 billion in tax breaks on home builders and banks, as early as Wednesday. That's also when a key House panel is to consider a rival Democratic plan that instead steers tax breaks toward first-time home buyers and investors in low-income rental housing.

The emerging rift clouds the prospects for a broader housing rescue plan that would have the government step in and insure $300 billion in restructured loans for homeowners staring at foreclosure. Rep. Barney Frank, D-Mass., the Banking Committee chairman, begins hearings on that measure Wednesday.

The housing debate is unfolding as Democratic leaders are considering using an upcoming war spending bill as a vehicle for additional economic aid, such as an extension of jobless benefits and food aid for the poor.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev. are calling for the rescue package President Bush signed in February, including rebates ranging from $300 to $1,200 for most wage earners, to be followed up with another so-called "stimulus" plan.

"We believe that Congress and your administration must now turn their attention to Main Street and help families in crisis," Reid and Pelosi said in a letter to Bush Tuesday. Such an effort, they wrote, would include "a financially prudent package of housing policy reforms that can avert a wider foreclosure crisis," expanding jobless benefits, government aid for struggling families, and spending on infrastructure and alternative energy.

On housing, Pelosi has made little secret of her distaste for the Senate's approach. "Hopefully, the balance will swing to being more in favor of the families who are in danger of losing their homes," she told reporters last week.

The House plan would give first-time home buyers a 10 percent credit - up to $7,500 - on the purchase of a new home. It is targeted toward lower earners, with those making $70,000 (or $110,000 for a couple) receiving smaller credits.

"We need to provide relief to the buyers and families themselves, not just the banks and builders," Rep. Charles B. Rangel, D-N.Y., the Ways and Means Committee chairman, said Tuesday. "The House bill puts families first - offering a refundable tax credit to first-time home buyers, essentially a zero-interest loan to help defray the cost of purchasing a house."

Rangel's panel is scheduled to consider the measure Wednesday, and House leaders plan to add it to the broader housing overhaul expected to come to a vote in May.

The Senate measure - which easily cleared a procedural hurdle Tuesday afternoon by a 92-6 vote - instead proposes awarding a $7,000 tax credit to people who buy foreclosed homes or homes on which foreclosure has been filed. It is aimed at helping get foreclosed homes off the market, thereby stabilizing home prices and keeping blighted houses from dragging down neighborhoods. However, some economists argue it could encourage foreclosures and distort the housing market, lowering the value of homes occupied by people who are up to date with their mortgages.

The White House, meanwhile, weighed in against the Senate bill Tuesday, opposing provisions to fund state and local government purchases of foreclosed homes and a $7,000 tax credit for people who buy foreclosed homes.

"The bill will likely do more harm than good by bailing out lenders and speculators and passing on costs to other Americans who play by the rules and honor their mortgage-debt obligations," said White House Press Secretary Dana Perino.

Jim Manley, Reid's spokesman, said those comments "sound like yet another excuse to do nothing to help the thousands of American families facing foreclosure each day. The White House has made it clear it is content to help Wall Street while Main Street fends for itself, and wrongly thinks this problem will fix itself in time."

Both plans allow people who don't itemize their deductions to claim them on their property taxes, chiefly benefiting homeowners who have paid off their homes and can't claim a deduction on mortgage interest. Both also would enhance the ability of state and local housing finance agencies to use tax-exempt bonds to refinance distressed subprime mortgages.

The Senate measure also provides $100 million in pre-foreclosure counseling, $4 billion in grants for communities with the highest foreclosure rates to buy and rehabilitate foreclosed properties, and stronger loan disclosure requirements.

Senate Democrats defend their measure as a well-rounded response to the housing crisis that's at the crux of recent economic woes. But senior House Democrats have quietly derided the plan as ineffectual and skewed toward businesses, while liberal groups have been vocal in their opposition.

"It turned out that the bulk of the bill was taken up by a homebuilder bailout," said Jacob Hay, a spokesman for the Laborers International Union of North America, the construction workers union.

Even some Republicans said the plan was titled unfairly toward the wealthy.

The bill "is very, very heavily tilted to Wall Street and not to Main Street. ... It's the little guy who's not being taken care of," said Sen. Arlen Specter, R-Pa. "This is not half a loaf, this is a crumb."

The main difference between the House and Senate bills is a provision in the latter that would permit homebuilders and other businesses absorbing heavy losses now to reclaim taxes paid when times were good. It would cost $25 billion through 2010.

The roughly $11 billion House measure would be paid for in part through a Bush administration-proposed plan to help the IRS check whether investors are accurately reporting their taxable gains. Brokers would be required to report the purchase price as well as the sale price of publicly traded stocks and mutual funds.

[frankbowers]

I have a big problem with giving any one my money and Our Congress wish to give, give, give. The banks and mortgage companies did what they did with THEIR EYES WIDE OPEN and many of the investors GOT BIG PAYIOFFS FOR DOING IT and home buyers did so as well, the investors WITH THIER COMMISSIONS NEED TO BE TAKEN Back they did so and do not need a break period it was a chance they took when they tied the knot at the brokage firm. I took a job and paid my bills and did not expect no one, nor did any one com and pay my bills I did with out and made do with what I had but I am capable of adding 2 + 2 perhaps they are too ignorant to do so but I do not need to help them now they had an oppertunity to go to school when they were kids but failed to listen te the 3 R''s and that is their problem not mine,so do not punish me for them playing hookey or what ever. NO WAY DO YOU BAIL OUT THE BANKS AND INVESTORS OR THE MORTGAGE COMPANIES THEY KNEW WHAT THEY WERE DOING IT IS CALLED "GREED" LET THEM LEARN FROM THEIR MISTAKES DON''T MAKE ME PAY FOR THEM.
Frank Bowers of Austin, Tx.

[joyous88]

they should simply use the repunlicon method;

tax the poor, subsidise the wealthy and the corporate,

and to helll with you and your house

[drivelphobe]

No bail outs. If an individual or company makes bad decisions, they have to suffer the consequences. Can all Democrats be so stupid? This country is run by self-indulgent, arrogant buffoons. I guess the electorate deserve this chaos. Mexicans sneaking over the borders, middle-easterners scamming everyone, and entitlement programs being developed for anyone who just doesn''t want to assimilate. Civil disorder is inevitable and the loss of life will be massive. Why aren''t our laws enforced? It seems so simple and yet our leaders don''t give a ***.

[payasyougo]

"Dems Split On How To Ease Housing Crisis"

They cannot agree on which program will make them appear the greatest saviors.

[bgwinnett]

dowjones20k,

I agree with your comment, but if you subtracted at least 10k from your handle, you would look a lot more believable, in my opinion.

Posted by FeelFree1 at 06:25 AM : Apr 09, 2008

Make that 6K
I can''t actually believe that some people are predicting a 20k Dow by the years end. Mind you all Wall St looks at is profits not the economy it seems a the moment and more and more profits are coming from abroad anyway.

[feelfree1]

dowjones20k,

I agree with your comment, but if you subtracted at least 10k from your handle, you would look a lot more believable, in my opinion.

[dowjones20k]

Another give away for big business and another attempt to make the foolish who cant pay their bills feel good ..

Idiotic that Americans are so gullible ... and we will pay for all of these "stimulus packages".

When will the American public/Congress learn that to reward being in debt is the wrong way to move the economy forward.

Stop living off your home equity/credit cards and live within your means !!!

[timdgrim]

Economic Stimulus Plan:
Give every legal American Citizen $1 Million to take care of their financial problems. In the long run, it will still be cheaper than these wars now and that are on the way. Well maybe not.....if the Oil companies knew that was going to happpen, the price of a gallon of gas would go to $10,000 a gallon.
Oh well, just an idea......

[feelfree1]

The Democrats are less than worthless.

Better Title:

"The Democrats Soon to Join Republicons in Sewer of History"

With "opposition" like Democrats, who needs Republicans?

[bgwinnett]

If we are Prepared Socialize wall Streets losses, up to $1Trillion BTW, lets Socialize property market losses too bared by individuals on Main Street.Ah but this welfare only exists if your properties a skyscraper in Manhattan.