The Senate bill has also come under harsh criticism from consumer advocates, unions and groups representing borrowers, who complain that it does little to help people at risk of foreclosure. In particular, they decried the stripping of a provision from the bill that would allow judges to reduce mortgage debts on primary residences in bankruptcy.
And now, with Rangel’s repudiation of many of its key tax provisions, House Democrats appear to be piling on.
In contrast to the Senate legislation, the House bill would grant a tax credit to first-time home buyers, which the National Association of Realtors pushed for, and boost incentives for developers of low-income housing. That measure, Rangel argued, would “put builders to work and create affordable alternatives for families seeking new housing.”
The House bill, which Ways and Means will mark up on Wednesday, also scraps the Senate’s tax credit for buyers of foreclosed properties and the tax break aimed at home builders. And, unlike the Senate bill, it contains revenue raisers to offset its entire $11 billion cost.
That is likely to invite opposition from the business community, which has worked to strip pay-fors from tax legislation in this Congress. But it could win support from conservative Blue Dog Democrats in the House who hold budget discipline as their highest goal.
“Who raises taxes in a recession?” asked Bruce Josten, the top lobbyist for the U.S. Chamber of Commerce.
Rangel proposes paying for the tax relief by requiring brokers to report the amount investors paid for a stock and by delaying a change allowing multinationals more leeway in how they apply foreign tax credits. Those provisions would raise roughly $8 billion and $3 billion, respectively, according to Ways and Means Committee estimates.
Josten said the provision affecting global firms would put his members at a “competitive disadvantage” with their foreign rivals.
However, the House bill won praise from the Mortgage Bankers Association, which said that both it and the Senate legislation would aid the housing market.
“This is all going to be helpful,” said Francis Creighton, the vice president of government relations for the trade group. “We don’t view the House and Senate bills as an either-or proposition.”
The House legislation has some overlap with the Senate bill, including a provision granting a standard deduction for property taxes for homeowners who don’t itemize their taxes and an increase in the cap on mortgage revenue bonds.
Senate Minority Whip Jon Kyl (R-Ariz.) said that it was “premature” to discuss whether Senate Republicans would negotiate with the House on housing legislation but indicated that large additions to the Senate compromise would be unwelcome: “I think it all depends on what the approach of the House is going to be.”
Aside from tax measures, House Democrats are also departing from the Senate’s approach in other ways. House Speaker Nancy Pelosi (D-Calif.) has signaled her support for the bankruptcy measure that was stripped from the Senate housing bill due to GOP opposition.
And on Wednesday, House Financial Services panel Chairman Barney Frank (D-Mass.) begins hearings on a proposal to have the FHA back up to $300 billion in refinanced mortgages for troubled borrowers — but only after lenders cut down the size of the loans first to make them more affordable for borrowers.
Senate Banking Committee Chairman Chris Dodd (D-Conn.) attempted but failed to include similar legislation to the Senate housing bill.
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