Senate OK's fix for crisis in housing
WASHINGTON - The US 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 to 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 bill, 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 yesterday that lawmakers and the administration would devise a compromise plan.
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. Clinton and Obama issued statements 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 that would have allowed judges to alter loan terms in bankruptcy court.
The bill could still be rewritten in negotiations with House Democrats, Senate Banking Committee chairman Christopher Dodd, a Connecticut Democrat, said. Dodd also said he hoped lawmakers would follow up yesterday's vote with a series of other housing proposals, including one that would allow the government to insure refinanced mortgages after lenders agree to reduce the amount owed. 