As Senate Debates Stimulus, Dodd and Lieberman Demand Help for Housing Market
SENATE STIMULUS
The Day
Katie Koch
Boston University Washington News Service
2/4/09
WASHINGTON – As the Senate debated its economic stimulus package this week, Sens. Joe Lieberman, D-Conn., and Chris Dodd, D-Conn., spoke out for increased funds to get the housing market back on track—a key component, both said, of America’s economic recovery.
Meanwhile, the White House, with its American Recovery and Reinvestment Plan, focused on job creation. The administration’s plan would create 43,700 jobs in Connecticut over the next two years, 90 percent in the private sector, according to the White House.
“There are millions of Americans who need work and there is an enormous amount of work that needs to be done in the country,” Lawrence H. Summers, director of the National Economic Council, said Wednesday. “And what this temporary funding does is bring the people without work together with the work that needs to be done.”
The debates underscore the challenges that face Congress and the new administration as the Senate struggles to craft an economic recovery plan that will please both political parties while addressing the nation’s many pressing needs.
Lieberman threw his support behind increased tax breaks for homebuyers, which, he said, would bolster the economy by jump-starting the ailing housing market.
On Wednesday he introduced with Sen. Johnny Isakson, R-Ga., an amendment that would increase the homebuyer tax credit to $15,000 from its current $7,500. The amendment, which passed Wednesday night, would extend the tax credit to all homebuyers, not just first-time homeowners, and would not have to be paid back.
“Real economic growth will not resume until housing values stabilize and American families once again have faith and confidence that the most valuable asset they own—their home—is safe and secure,” Lieberman said in a statement.
A Lieberman aide said the tax credit, combined with a proposed mortgage-rate incentive from the federal government, would be likely to cost $18.9 billion over the next 10 years. But Lieberman said he believes such aggressive jolts to the housing market would put even more money back into the economy.
Economists have predicted the tax credit could spur 1.1 million home purchases in 2009, he said on the Senate floor. It would generate $14 billion in federal tax revenues and create 539,000 new jobs, mostly in construction, he added.
Dodd also said he sees weaknesses in how the Senate stimulus bill addresses the financial problems that have contributed to the current economic downturn. In addition to modifying the bill, he said he wants to see $50 billion of the funds allocated through the Troubled Assets Relief Program, the so-called bailout package that passed last fall, dedicated to preventing foreclosures.
“We had over 2,000 foreclosures in Connecticut in the month of December,” Dodd said in an interview. “You’ve got 8 million homes under water, that is, where the mortgages exceed the value of the homes, in the United States. Obviously foreclosure mitigation is a huge issue.”
“Whether it’s foreclosure mitigation or ideas that will get the credit markets moving again, I think [these issues] are very important,” Dodd said Tuesday. “The House [bill] does a bit better, I think, in those two areas.”
Dodd said the White House’s plan for job creation was a “positive step,” but far from sufficient.
“For every job you’re creating you hear about two that get lost,” Dodd said. “My state’s lost 125,000 over the last year or so.”
In addition to its job creation estimates, the White House Wednesday released a breakdown of benefits Connecticut would receive from some of its key stimulus proposals:
- 278,000 Connecticut workers who have lost jobs would be eligible for an extra $100 a month in unemployment insurance benefits.
- 30,000 Connecticut families would be eligible for a $2,500 tax credit for four years of college tuition.
- At least 80 Connecticut schools would receive money for renovations and technology upgrades.
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