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Congress passes bill extending unemployment insurance, home buyer tax credit

By Perry Bacon Jr. and Dina ElBoghdady
Congress on Thursday completed final approval of a bill that includes several measures designed to spur the economy and help people who have lost their jobs, representing its latest intervention as the country suffers through its worst recession in decades.

The $24 billion bill, which the White House said President Obama will sign on Friday, would provide unemployment benefits of least 14 weeks for people out of work. Those in the more than two dozen states with unemployment rates above 8.5 percent would receive up to 20 weeks of the benefits. The legislation would also extend through April 30 a $8,000 first-time home buyer tax credit that was passed earlier this year.

Another provision allows businesses that had operating losses in 2008 and 2009 to seek refunds for taxes paid on profits over the past five years. It passed in the House on Thursday 403-12 after the Senate approved it Wednesday by a 90-0 vote.

"It's hard to think of any other initiative we can name that is as beneficial to job creation," House Speaker Nancy Pelosi (D-Calif.) said of the unemployment benefits provision. "Its original purpose is fairness to those workers who have paid into the insurance system, and now they are getting insurance benefits, but it also has an impact as a stimulant. "

Under the housing program, people seeking to own a home for the first time in three years would receive an $8,000 tax credit if they sign a contract by April 30 and close on it by June 30. Current homeowners who are buying a new primary residence would be eligible for a $6,500 tax credit starting Dec. 1 if they owned their home for five consecutive years in the previous eight.

The timing is more lenient for military families who have been deployed overseas for 90 days or more in 2008 or 2009. They would have until April 30, 2011 to sign a contract.

But the measure limits the purchase price of the home to $800,000. It also imposes income caps so that people who make more than $125,000 annually and couples who make more than $225,000 would not be eligible for a refund. Anyone who collects the tax credit but sells their home within three years of buying it must return the refund.

The program is estimated to cost $10.8 billion.

The passage of the tax credit provision was a huge win for the real estate industry, which has been lobbying aggressively to extend and expand the program. They say the tax credit has helped boost sales and clear out a glut of lower-priced homes, especially foreclosures, and that ending it would be a blow to the housing market's recovery.

But critics of the program, including some economists, say the program is far too expensive. They say that most people who used it would have bought homes anyway. They attribute the uptick in home sales in recent months more to low prices and record low interest rates.

The bill is part of a series of proposals Democrats are considering to help boost the economy and aid Americans out of work. While they are weary of casting the policies as a "second stimulus" because the $787 billion bill passed earlier this year remains controversial because of its cost even as unemployment remains high, all the provisions in the bill were in the original stimulus legislation but set to expire.

The bill had been delayed for weeks as the two parties debated a number of issues not directly related to the provisions. Republicans unsuccessfully tried to force a vote on the bill to attach a provision to end the Troubled Asset Relief Program that was part of last year's effort to aid troubled financial firms.

By Web Politics Editor  |  November 5, 2009; 3:59 PM ET
Categories:  Economy Watch  
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Comments

Why is an unemployed person in a state with higher rate of joblessness entitled to longer benefits than a person who has been jobless the same amount of time in Virginia? This is stupid logic. If Federal money is involved, the benefits should be for the same period in all states. People in areas of Southwest Virginia have just as high a jobless rate as the worst hit areas of Michigan! Are they less important?

Posted by: jerryva460 | November 5, 2009 4:54 PM | Report abuse

Reports indicate that "Current homeowners who are buying a new primary residence would be eligible for a $6,500 tax credit starting Dec. 1 if they owned their home for five consecutive years in the previous eight."

What is the purpose of such an arbitrary requirement?

This provision means that the program excludes some of the people hurt most by the decline in home values. I would love to hear one good reason that I should not qualify for this program simply because I bought my home 3.5 years ago instead of the requisite 5! This requirement is totally arbitrary and unfair. If the goal is to prevent those who have already received the $8,000 credit from receiving another credit, why not simply provide that an individual may only qualify for one or the other?

Posted by: Afewquestions | November 5, 2009 5:15 PM | Report abuse

Excellent, let's have the federal government meddling in the housing market and artificially inflating it!

That had nothing to do with how we wound up in this mess.

Posted by: Jeff08 | November 5, 2009 5:17 PM | Report abuse

Oh My.

What are those mean, nasty Teabaggers going to do to the 200+ GOPers who supported this.

I can't hardly stand to watch the bloodbath.

Posted by: SwellLevel5 | November 5, 2009 5:28 PM | Report abuse

More free money falling from the sky....

Posted by: free_np | November 5, 2009 5:53 PM | Report abuse

More retarded policy supported by both parties. How could a liberal or a conservative support a policy that subsidizes people making up to $225,000 to buy a house worth up to $800,000? This applies to existing homeowners. So go ahead a borrow even more money with no offsets. This country is doomed. This bill does not increase aggregate demand for housing; it just transfers wealth to realators and wealthy homeowners. It is disgusting and should make taxpayers revolt!

Posted by: commenter4 | November 5, 2009 6:07 PM | Report abuse

Ridiculous to offer money for something that people will buy, anyway. How 'bout an overall tax cut, you dopes? Stimulate the whole economy. This trickle down s--- is is killing the middle class.

Posted by: JAH3 | November 5, 2009 6:16 PM | Report abuse

I think this is a wonderful plan. I do wonder why couples earning more than $225,000 per year are in need of a government boost equal to that of a family that has to survive on $50,000 per year. Perhaps the idea is to encourage people to buy up the millions of homes that are standing empty? Households that earn more than $200,000 per year represent the top 3% of wealthiest Americans. If the wealthiest 3% of American families can't afford to buy their own homes without help, I'll eat my hat!

Posted by: karela | November 5, 2009 6:18 PM | Report abuse

My friend's children are 5 and 3. I suspect that by the time they grow up, the govt. handout for buying a first-time house will morph into a constitutional right.

What do you think will happen in April? The real estate industry would have become more used to the idea of feeding at the trough, and will lobby even more aggressively to keep it going, and, since it will be an election year, I can't see any of our fearless representatives saying no.

Posted by: vivek1 | November 5, 2009 6:34 PM | Report abuse

I think that we should have a responsibility tax exemption. If you have paid your mortgage/rent on time for the past five years,lived with your spouse (or domestic partner) during those five years, have not declared bankruptcy, fallen behind on credit card debt and have paid your state and Federal taxes on time you should be granted a Federal Responsibility Exemption (FREE, for short) on your income taxes. This exemption will be granted each year that these bogus stimulus programs continue to be in place (TARP, home buyer's credit. senior citizen COLA bump-ups, etc).

This FREE (Federal Responsibility Exemption) would entitle the taxpayer to one year of not paying Federal Taxes, valid until the Taxpayer dies. This is at least as likely to help out the economy as these other programs, and would actually reward concientious citizens, as opposed to those with their hands out.

Posted by: Beagle1 | November 5, 2009 7:11 PM | Report abuse

Something is better than nothing. In a desperate situation of survival, any help is priceless. The extended "lifeline" might keep the hopes alive for 14-20 weeks, but the question surfaces: What awaits for the 15 millions unemployed after that stipulated period? What about those who can't get the valuable benefit for a mere time limit or for another reason of less significance? Among the remedial measures can be mass hiring by the federal and state departments and their subsidiaries. Aren't there quite a few better qualified job seekers than many overemployed? Also, don't the job seekers deserve jobs while "illegals" are employed?

Posted by: MustaqurRahman | November 5, 2009 7:21 PM | Report abuse

Am I the only one paying taxes?

Posted by: charlietuna666 | November 5, 2009 7:29 PM | Report abuse

Comparison of income is only useful when considered in concert with the amount of debt of the earner. Many of those who represent the "top 3%" of earners also have significant debt. While some have significant debt as a result of irresponsible actions, for many that debt is the result of massive school loans needed to get the education necessary to obtain high-paying jobs. Should we punish people who worked hard and borrowed alot to advance themselves?

Income must also be considered relative to cost of living. The value of a Dollar is not the same in Washington, D.C. as it is in many other parts of the country - just look at the relative housing costs for proof of the disparity.

Posted by: Afewquestions | November 5, 2009 7:51 PM | Report abuse

Does Nancy realize the the vast majority of unemployment insurance funds are paid solely by the EMPLOYER, not the employees.

As a CA employer, my SUTA costs quadrupled from 2008 to 2009. I've cut only two people this year but I'm paying over $120k per year into the state fund.

Posted by: RobParker | November 5, 2009 8:18 PM | Report abuse


I really don't understand why this is happening. I earn less than $100K and I don't see any relief in my house payment. In fact, how many of us as individuals have seen a penny of this relief money. I guess you have to be dirt poor or a rich corporation.


Posted by: mortified469 | November 5, 2009 8:35 PM | Report abuse

===================
My friend's children are 5 and 3. I suspect that by the time they grow up, the govt. handout for buying a first-time house will morph into a constitutional right.

What do you think will happen in April? The real estate industry would have become more used to the idea of feeding at the trough, and will lobby even more aggressively to keep it going, and, since it will be an election year, I can't see any of our fearless representatives saying no.
=================
Don't worry so much ... they'll be fine - we're going to take care of this in this decade. As for what will happen before April - The hope is that $6,500 will cause so many of the existing home-owners run out and put a contract on a home ... and then they all try to market their existing house - since they'll all be contingent contracts ... the inventory is going to bloat ... that's the magic of "free money" and real-estate lobbying!

Posted by: free_np | November 5, 2009 8:37 PM | Report abuse

Am I the only one paying taxes?

Posted by: charlietuna666 | November 5, 2009 7:29 PM |

No. There's 2 of us.

Posted by: Fredneck2 | November 5, 2009 9:55 PM | Report abuse

Oh great, now we're giving a tax credit to "move up" home buyers.

This is a gift to the NAHB and NAR and a misguided attempt to reinflate the housing bubble.

Have we learned nothing?

Posted by: JuliaXA | November 5, 2009 10:19 PM | Report abuse

What a bunch of self-righteous whiners are on this board. You folks are just pissed because you don't qualify. Losers.

Posted by: davis_renee | November 5, 2009 10:32 PM | Report abuse

YEA HA, the Senate passed the unemployment extension before I was on my death bed. Let me add, we unemployed are good people. At least we are not eating horses, not that we ever would, thank God. I'm Country Carl the Artist and Advocate for additional unemployment benefits on Unemployment-Gone-Mad dot com. Across this great country pawn shops were the only ones mining gold. As we waited for an unemployment extension, thousands more became dumpster divers, tent pitchers and street corner beggars. Even pets were becoming a burden for tearful owners and freaking out as they became abandon. So my hat is off to those of you who finally saw the light, because these New Depression Blues times can drag a good man to the bottle. Bless you Senators my beer summit is to you old farts. So here is another big YEA HA from Country Carl. So google me up and cheer along, you actually finally did it.

Posted by: NewDepressionBlues | November 6, 2009 5:41 AM | Report abuse

Another entitlement from Moneytown,rather than get this economy going again,employers hiring people,they just keep throwing money at people not to work. More socaialism from both parties.When ever you need help, you just come to papa.They create situations to solve in a way that promotes their agendas.

Posted by: ebjspainting | November 6, 2009 6:02 PM | Report abuse

I think I just lucking into $6500. I am set to close on a house next Friday. I believe the facts are incorrect in the article above and the date the $6500 goes into effect is tomorrow, not Dec 1st.

Posted by: JPW2 | November 6, 2009 8:19 PM | Report abuse

Why would it have been Nov. 7th? That seems a little off as well.

Mike- http://www.onedollarglobeinsurance.com

Posted by: ElMikeO | November 11, 2009 4:47 PM | Report abuse

The comments to this entry are closed.

 
 
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