[Congressional Record Volume 155, Number 147 (Tuesday, October 13, 2009)]
[Senate]
[Pages S10337-S10338]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    FIRST-TIME HOME BUYER TAX CREDIT

  Mr. ISAKSON. Mr. President, I come to the floor to discuss our 
economy and the pending termination or sunset of the first-time home 
buyer tax credit and the potential implications and effects it 
certainly is going to have on what is at best a very fragile economy 
today.
  First, I wish to reference this morning's USA TODAY business section 
where it was reported that existing home sales trailed down in the 
month of August off of the month of July. They did note they were 
better than August of a year ago but still deplorably low. Of all of 
the sales that were made in the month of August, 30 percent were 
attributable to the first-time home buyer tax credit. Unfortunately, 
substantially all the rest were attributable to short sales or 
foreclosures.
  I was home Friday. In my State of Georgia, we have a law that says 
that if you foreclose on a deed to secure debt or a mortgage, you must 
advertise for four successive Fridays preceding the first Tuesday in 
the following month in order to foreclose. So every Friday in the legal 
organ of every county in Georgia, there is a section for foreclosure 
advertisements. I hold before the Senate today all 74 pages of the 
Marietta Journal legal notices announcing the foreclosure on 1,157 
homes in a county of 700,000 people.
  Houses continue to decline in their value because the market demand 
is down. The foreclosures we see today are not subprime loans; they 
were the loans that were foreclosed on a year or a year and a half ago. 
When we read the addresses of these 1,157, which I won't do, they are 
the addresses of mainstream America and the mortgages that are being 
foreclosed on are what are called conventional loans that were made to 
people who had jobs, had income sufficient to make the payments, and 
had downpayments of 5, 10, or 20 percent. These are the good loans a 
year ago that today are the loans being foreclosed on. In my State, 1 
out of every 13 houses shows mortgage holders right now behind in their 
payments. Foreclosures are at record rates.
  The first-time home buyer tax credit is about to expire. What does 
that have to do with this foreclosure problem we have and the problem 
of declining values of houses and shrinking equities for the American 
people? It has everything to do with it. We have a great demonstration 
project in the first-time home buyer tax credit that shows this 
Congress the way to continue and get a recovery in our housing market. 
In the time the first-time home buyer tax credit has been in effect, it 
is estimated that 350,000 home sales were made. That is 357,000 sales 
that would not have taken place.
  What we need to do is look at the value of the home buyer tax credit 
and see whether an extension makes sense and, if it does make sense, 
how it should be structured. First of all, I say it makes sense because 
we had modest success the first time. But I think the limitation of a 
first-time home buyer at a maximum of $150,000 in income actually 
restricts us from helping the part of the market that is represented in 
these foreclosure pages because these are houses of people with more 
than $150,000 in income who would need to qualify. These are what are 
known as the move-up homes, the homes the executives and transferees 
from around the country sell when they leave their home county and are 
transferred to a job in another city or another State. We need to 
energize that market because the move-up market is where the problem 
exists.
  So I would submit that when we look at the sunset date of November 30 
on the first-time home buyer tax credit, we should extend it--not 
forever but through midyear next year, to the end of June 2010. There 
is a reason for that recommendation. The worst 3 months of the year in 
any housing market anywhere in the United States are December, January, 
and February because it is winter and because it is the holidays. So 
there is not much of a market to begin with in those 3 months. If this 
tax credit dies in November and then it dies the day before the 
declining market takes place, by the time the spring market comes back 
in March and April, it is too late and we will have a protracted period 
of even poorer sales than we have had recently. But if we pass and 
extend the credit through June 30 of next year, we continue to buoy the 
housing market around the country. If we take away the first-time home 
buyer limit and raise it to any home buyer who buys a home for their 
principal residence and resides in it for 3 years and we raise the 
income limitation from $150,000 for a family to $300,000, we stimulate 
the entire marketplace. That has a cost to it, a score of $16 billion. 
That is a lot of money, but it is less than 3 percent of the amount of 
the stimulus, and we know from what has happened in the last 9 months 
that it works.
  It is very important that we stimulate and continue the existing 
stimulation of the housing market. The recession that began in December 
of 2007 began with a collapse of housing, first because of the subprime 
mortgage failures, but it continues to today, a continuing collapse, 
and the failures aren't subprime, high-risk credits, they are 
mainstream America. There is a point in time when we owe it to our 
country, we owe it to our economy, we owe it to mainstream America, 
where we know we have a proven program that works, to extend it and 
buoy the marketplace.
  I wish to deal with some of the negatives some people have expressed 
about extending the tax credit.
  The first negative I have heard in a lot of interviews is: Well, 
isn't all you are really doing is moving forward some sales that are 
going to take place anyway? Well, of course. That is the object. The 
problem is, we don't want them to take place in 2011 and 2012; we would 
like to move them forward to take place now. We want people back in the 
business of making the decision that it is a good time to buy.
  Secondly, people will say: Well, it costs too much. Let's look at 
what we have done in 2\1/2\ or 1\1/2\ years in terms of cost to try to 
save an ailing economy. We have put $85 billion in 1 night in AIG. That 
is a lot more money than $16 billion. The Federal Reserve has at one 
place or another invested over $5 trillion. That is a lot more than $16 
billion. The stimulus, which is a 2-year stimulus, which is just in its 
infancy of trying to make some difference, was $787 billion. The 
Troubled Asset Relief Program, or TARP, which was passed in October of 
last year, was $700 billion. Yet we have a proposal that has generated 
350,000 sales, costs $16 billion, that is about to die, where all of 
those other programs and trillions of dollars have only saved a 
collapse but not regenerated an economy.
  So I come to the floor today to ask everybody in the Senate to think 
about what is happening. Six weeks from now, the tax credit sunsets. 
When it fails, the market again will have downward depression on 
values, on sales,

[[Page S10338]]

and most importantly on consumer confidence. Let's try to slow down the 
rate of foreclosure. Let's help Middle America, which right now faces 
difficult times. Let's take them out of the newspaper and let's take 
them back into a buoyant economy that has jobs, has growth, and has 
promise for the future.
  I submit that an extension of the first-time home buyer credit by 
removing the means test, raising the income limitation, and extending 
it to midyear is good for America, makes good sense for this Senate, 
and I hope we will find the time before the current bill sunsets to 
pass it and do it for America.
  With that, Mr. President, I yield the floor and suggest the absence 
of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant bill clerk proceeded to call the roll.
  Ms. MURKOWSKI. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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