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