Isakson proposal passes Senate: $15,000 credit for homebuyers

The Senate on Wednesday unanimously approved a proposal by Georgia Republican Sen. Johnny Isakson that would give a $15,000 tax break to anybody who buys a house by the end of the year.

The proposal, the latest addition to the still-growing economic stimulus bill that has reached nearly $900 billion, is seen by supporters as a much-needed shot in the arm for the ailing housing industry. Housing industry leaders immediately cheered its passage.

“A $15,000 tax credit … is a pretty huge savings,” said Steven Fischer, president of the Georgia Association of Realtors, one of many housing industry groups that has been pushing for the program. “We feel like that will really help get people off the fence and help them make a move.”

President Barack Obama is hoping to get a completed economic stimulus bill within the next two weeks. Congress is still considering other proposals designed to recharge the housing industry, including a government-backed interest rate buy-down program that supporters say could push mortgage rates as low as 4 percent for some home buyers.

Isakson, a Republican and former Cobb Country real estate executive, modeled his amendment after a tax credit program that helped resurrect the ailing housing market during the Ford administration in 1975.

“It is rare that we have a road map to success in times of difficulty, but this country has once before realized a housing crisis every bit as bad as the one we have today and economic troubles every bit as dangerous,” Isakson said in a statement late Wednesday.

“We have a pervasive housing problem, and we have a historical precedent that works,” he said. “I am proud this Senate has joined together, learned from history and repeated a method that worked by adopting this amendment.”

The proposal would let anyone who buys a new or existing home within one year of the enactment of the economic stimulus bill get a credit on his or her tax return of $15,000 or 10 percent of the home’s purchase price, whichever is less. It would only apply to the buyer’s principal residence, and the buyer would have to stay in the home for a minimum of two years.

The credit would replace a $7,500 tax break that’s now available only to first-time home buyers.

The housing amendment will tack another $18.5 billion onto the stimulus bill. But proponents say the cost of the program will be easily offset if it helps the housing industry rebound.

“When you stimulate housing, it instantly puts money into many different sectors of the economy at one time,” said Kurt Cannon, president of the Home Builders Association of Georgia, in an interview earlier this week.

“When you just give people some more money to spend, they might go to Wal-Mart and it might have a little tiny bump” in the economy, Cannon said. “But it doesn’t do anything in the longer term” like investing in a home.

The passage of the housing amendment was a major victory for Republicans on a day that saw many of the party’s other attempts to reshape the economic stimulus bill fail.

The most sweeping of them, by Sen. Jim DeMint (R-S.C.), failed on a mostly party-line vote of 61-36. It would have replaced the White House-backed legislation with a series of tax cuts on personal and business income and capital gains at the same time it made cuts passed during the Bush administration permanent.

Republicans remain adamant that the total cost of the bill must be reduced.

“This bill needs to be cut down,” Republican leader Mitch McConnell of Kentucky said on the Senate floor. He cited $524 million for a State Department program that he said envisions creating 388 jobs.

“That comes to $1.35 million per job,” he added.

Obama and Senate Democrats mounted a counteroffensive against Republicans. Obama said the criticisms he has heard “echo the very same failed economic theories that led us into this crisis in the first place, the notion that tax cuts alone will solve all our problems.”

“I reject those theories and so did the American people when they went to the polls in November and voted resoundingly for change,” he said.

Even so, Democrats concede privately they will have to accept some spending reductions along the way. And Obama softened the partisan impact of his comments by meeting at the White House with senators often willing to cross party lines.

His first visitor was Sen. Olympia Snowe (R-Maine), a moderate GOP lawmaker. Later he met with Sens. Susan Collins (R-Maine) and Ben Nelson (D-Neb.).

“I gave him a list of provisions” for possible deletion from the bill, Collins told reporters outside the White House.

Among them were $8 billion to upgrade facilities and information technology at the State Department and funds for combatting a possible outbreak of pandemic flu and promoting cybersecurity. The latter two items, she said, are “near and dear to her,” but belong in routine legislation and not an economic stimulus measure.

Collins and Nelson have been working on a list of possible spending cuts totaling roughly $50 billion, although they have yet to make details public.

The Associated Press contributed to this article.