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Congress poised to expand credit for homebuyers, and jobless benefits
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The Senate and House are poised to agree on a compromise measure to extend unemployment benefits that also would expand a popular $8,000 tax credit for homebuyers, despite a recent government report on extensive mistakes and suspected fraud in the program.
The Senate might pass its version as early as today, and aides to congressional leaders say the House could accept it this week, sending the bill to President Obama to sign into law.
After weeks of partisan delay in the Senate, Democrats are eager to show progress before Friday, when the October jobless report is again expected to show high unemployment.
The homebuyers' credit -- enacted last year, expanded this year and scheduled to expire Nov. 30 -- would be extended to cover homes under contract by April 30. Also, it no longer would be limited to first-time buyers; people who have owned a home for at least five years could get a $6,500 credit on a new residence. Income limits for eligibility would be raised, making many more people qualify.
Extending and expanding the credit would cost an estimated $11 billion, on top of the $10 billion spent so far. It would be a big victory for the housing and real estate lobby and for the Senate majority leader, Harry Reid, D-Nev., who faces a tough reelection race next year in the state with the most claims for the credit per capita.
Critics complain that most of the credits go to taxpayers who would have bought their homes anyway, which even the industry acknowledges. Also, a congressional subcommittee released a Treasury Department report last month about suspected criminal and civil abuses of the program.
Government officials testified, however, that many of the problems may be due to confusion among taxpayers and the IRS about the overlapping 2008 and 2009 versions of the tax credit. With Congress likely to change the eligibility provision again, the new measure could present further administrative problems for the IRS, although the measure does include several new safeguards.
The Treasury Department report said that as of Sept. 30, the IRS had identified 167 suspected criminal schemes and was examining nearly 107,000 cases of potential civil violations.
While real estate groups and some economists say the credit has helped stabilize the housing market, critics say it is too costly a subsidy when low interest rates and home prices are incentives enough.
Under the new legislation, individuals with income up to $125,000 a year and couples earning up to $225,000 would be eligible.
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