TEXT OF COMMENTARY
KAI RYSSDAL: The Senate passed its version of the housing rescue bill today. It’s not at all certain the thing will make it through the House as it’s written now, and President Bush has said he’s not wild about it, but in the meanwhile, there’s a little something for everyone. People who buy up foreclosed properties will get a tax credit. Homeowners facing foreclosure will get credit counseling if they want it. Local governments are eligible for a couple of billion dollars to buy and repair foreclosed homes.
Commentator Jeff Birnbaum points out there’s another winner, too.
JEFF BIRNBAUM: The Senate has now passed legislation that addresses the recent meltdown in housing. The bipartisan plan has several components, but one of its largest is a surprise $6 billion in tax credits to help, not homeowners, but homebuilders.
Under the proposal, home construction firms could use their losses suffered last year and this year to claim rebates against the big profits they posted in years past. No other industry stands to get more out of the bill.
Why so much largesse? Proponents say a healthy homebuilding sector is key to a growing economy, and that may well be so, but the tax breaks are also the result of a very public and apparently successful extortion attempt of sorts by the homebuilders’ lobby.
So how did they pull it off?
A couple months ago the National Association of Home Builders took an unusual step. They announced they would stop giving millions of dollars in campaign donations until further notice. They didn’t say exactly why, but at the time, builders were angry the Senate had not approved those very same tax credits, among other expensive benefits the industry had sought.
In the weeks since then, the homebuilders have lobbied hard for help from Congress. They’ve sent letters to lawmakers and made personal visits to Capitol Hill. Those efforts surely had an impact, but I think it’s fair to say that the money mattered more. The homebuilders have one of the biggest political action committees in corporate America, and lawmakers didn’t want to give up all those donations.
After all, money is the mother’s milk of politics, and the Senate clearly isn’t the kind of place that likes to go thirsty. No word yet on whether the home builders will open their money spigot and begin to give out contributions again, but it would be a good guess that they will — if those tax breaks become law.
RYSSDAL: Jeff Birnbaum is a columnist at the Washington Post. Some of the big homebuilders did well today on the market. Pulte, for one, rose up nearly 3 percent. KB Home was up a bit less than 1 percent on the NY Stock Exchange. Overall this year the homebuilder’s index has spiked almost 30 percent.
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