Geithner mulls whether to push extension of first-time home buyer credit
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Treasury Secretary Timothy Geithner said today he hasn’t ‘made a judgment yet’ on whether to recommend extending the tax credit for first-time home buyers.
‘Obviously that’s something that I’m going to take a careful look at,’ he told reporters in Washington.
The heat is on to keep the credit (worth up to $8,000) alive, as the Associated Press reports:
There have been more than a dozen bills introduced in Congress to prolong the life of the tax credit past the Nov. 30 deadline. The credit is helping stabilize the housing market, but there are conflicting views about the practicality and cost of an extension. The National Assn. of Realtors and the National Assn. of Home Builders have launched marketing campaigns touting the credit and have pushed Congress to keep it going. But some lawmakers are balking at the cost, which may hit an estimated $15 billion -- more than double the amount projected in February’s economic stimulus bill.
As long as the Treasury is having no trouble selling debt (and it isn’t having any trouble at all), Congress and the administration may figure the incremental cost of the tax credit is no big deal. When you’re already running an annual deficit of $1.6 trillion, what’s another $15 billion?
But gems like this from the AP story may give some in Congress pause:
Critics . . . see the credit as a subsidy for people who don’t need one. Charles Curtis and his wife weren’t even aware of the tax credit until they put a $895,000 all-cash offer in July on a two-bedroom apartment in New York City. ‘It was a wow moment,’ said Curtis, 27, a freelance writer and researcher.
Not surprisingly, builders see extension of the credit as critical. The National Assn. of Home Builders, lamenting the 3% drop reported today in single-family housing starts in August, put out a release pleading for action on the credit.
‘With the $8,000 first-time home buyer tax credit set to expire at the end of November, the window is now basically closed for being able to start a new home that can be completed in time for purchasers to take advantage of that,’ said Joe Robson, the group’s chairman. ‘Builders are therefore pulling back on new construction at this time. Clearly Congress must act now to extend the tax credit if we are to keep the market moving toward a recovery.’
-- Tom Petruno