Sunday, November 8, 2009

Builders Benefit from Financial Aid to the Unemployed

BY JULIE HIRSCHFELD DAVIS
The Associated Press

WASHINGTON — Emergency help for the jobless will be a huge windfall for Realtors, home builders, mortgage bankers and others, and that’s no accident.

Those industries have spent months and millions of dollars making the case for $20 billion in tax cuts for home buyers and businesses to help create jobs and revive a sluggish housing market. Their lobbying campaign paid off Thursday when Congress voted to pass the tax breaks as part of an extension of unemployment benefits. President Barack Obama signed the bill into law Friday.

The legislation, which provides up to 20 weeks in additional pay to more than 1 million people who have lost or are in danger of losing jobless aid, passed by overwhelming bipartisan margins.

It also extends until spring a tax credit of up to $8,000 for first-time home buyers that had been slated to expire at the end of the month, adds smaller credits for some who own a home and makes the money available to wealthier people. The tax break is estimated to cost $10.8 billion over the next decade, and businesses that stand to benefit flooded Capitol Hill in recent weeks to push it through.

Realtors mobilized their 1.2 million members nationwide to write and call their representatives and senators to urge extension of the credit, saying failure to do so could cause this year’s housing market uptick to grind to a halt.

Several dozen of them flew to Washington recently to visit members of the tax-writing House Ways and Means Committee and the Senate Banking, Housing and Urban Affairs Committee to press the point. In case legislators didn’t get the message, Realtors sent more than 500,000 letters to Capitol Hill and made nearly 13,000 phone calls to Senate offices last weekend to corral support before a key procedural vote, according to a spokesman.

"There are Realtors everywhere who understand the impact of the tax credit to moving the housing market," said the National Association of Realtors’ Lucien Salvant.

Lawmakers tend to listen to the politically active bunch. Public disclosures show that Realtors have spent nearly $14 million lobbying Congress this year, and their political action committee gave about $12 million to candidates in the last election, according to federal campaign finance records compiled by the Center for Responsive Politics.

Sen. Johnny Isakson, R-Ga., an architect of the tax credit, was a Realtor before he was elected. He was instrumental in pushing through the original credit as part of housing legislation last year and extending it in the stimulus bill enacted in February.

Among the other prominent boosters of the home buyer break were the National Association of Homebuilders and the Mortgage Bankers Association, whose members depend on robust housing sales to survive. They joined Realtors in saying that allowing the tax break to end could drag down a weak economy.

Bill Killmer of the Homebuilders called the credit "a pretty powerful tool" in getting people contemplating buying a house to "move to yes and be motivated" to close the deal. Like the Realtors, home builders have been citing the tax credit in their marketing campaigns, using the government subsidy to propel their "Buy now!" message.

There have been bumps in the road, including a recent audit by an Internal Revenue Service watchdog that detailed mistakes, questionable claims and criminal schemes in the program. Proponents of the tax break scrambled to assuage lawmakers’ fears.

Nor did cost concerns derail the measure in the face of determined lobbying. The package contains a $10 billion tax break that allows companies that suffered during the last two years to use recent losses to reclaim taxes paid in the previous five years, when times were good.

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