With the Thanksgiving Recess just three weeks away, Senators burned the midnight oil last night to clear the way for the $8,000/$6,500 tax credit extension and expansion. Voting 85 to 2, the Senate cut off debate on a package of amendments and legislation. President Obama is expected to sign the tax credits into law later this week.
The $8,000 first-time home buyer tax credit has certainly done the job, boosting home sales by 9.4 percent to an annualized 5.57 million home sales pace, according to the National Association of Realtors.
But those numbers are a bit misleading.
Sales are about where they were in 1995. Just as the Great Recession has more than wiped out all jobs created since the turn of the century, the housing crisis has brought the U.S. housing market to a place it hasn’t seen since in a long time.
Senator Kit Bond (R-Mo.) voted against the extension and expansion of the $8,000 tax credit, saying “We’re kidding ourselves if we can prevent more fraud, more taxpayer losses.” The measure, as agreed to by Senate negotiators earlier, gives the IRS more power to catch tax credit fraud.
Some balked at the nearly $17 billion price tag. But what’s another $17 billion between taxpayers, right?
Seriously, one tax credit can easily lead to another stimulus, and the talk seems to be about what we do next to get the economy moving again.
President Obama is asking for creative ideas on how to create jobs, which readers of this blog know I think is a top priority for fixing what’s wrong. There are whispers of another stimulus package being needed, as if the $780 billion plus trillions more already spent were just a “first phase.”
As I sit in Hartsfield Airport this morning, watching our troops be saluted as they march toward their planes, I find myself thinking about the trillions we’ve spent fighting wars we can’t win, and how I wish the “Deciders” in Washington would spend the same kind of money nation-building within our own borders, as Thomas Friedman likes to say.
If you want to end the recession, spend a few trillion on creating new industries, retraining workers, and rebuilding our crumbling schools. Once people have jobs, the housing market will take care of itself and foreclosures will evaporate.
The tax credit is going to feel great. But a band-aid isn’t a substitute for major surgery.
