Another Bad Congressional Spending Idea

In a sweeping 98-0 vote, the U.S. Senate voted yesterday—with the U.S. House possibly voting today—to expand and extend the Homebuyers' Credit that gives first-time homebuyers up to $8000. The AP story was brought my way on comcast.net, and is consequently light on details, but here's the basic idea:

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.

The current credit ends next month. I found it interesting that three senators were quoted in the article. Here's one of them:

"This is probably the last extension," said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.

Really?? Whatever makes him think that?

This bill is expected to cost the Treasury $10,800,000,000. Given the state of our deficit right now, this does not seem like a good idea, especially considering this quote:

Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.

"For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home," Bond said. "And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place." [Emphasis mine]

Exactly!! We can probably conclude that much of that $10.8 billion is going to go to people who have no real entitlement to it, while the rest is going to encourage a lot of people to make a financial decision that helped get us and our economy to the place we are at now!

Note also that Sen. Bond voted for the bill...just like everyone else.

Another reason why we need change in Washington D.C.