Home Tax Credit Extension Is Much Ado About Nothing

Unless you are among the 180,000 people who signed a contract to buy a house before May 1, yesterday's Senate gesture to extend the deal-closing deadline on the federal homebuyer tax credit is the proverbial drop in the bucket.

Does anyone think that the closing of 180,000 more home sales on the market, in a national inventory of 4,044,000, really matters?

All the Senate's amendment would do is give an additional three months to close the deal for those homebuyers who were already in the system, already under contract on a home purchase by April 30. Now those wannabe buyers might be able to relax, get their nails done and stop calling their lender every hour to ask why the guy is still at lunch. (Delays in getting loans approved was the main reason these 180,000 people couldn't close on time. Lenders say they are overwhelmed by the volume of applications caused by the tax credit. That, and by being an industry known for spending a lot of time on Facebook.)

But it's about 180,000 homes. That's all. Under the amendment, those buyers, and only they, could still hope to claim an $8,000 first-time homebuyer credit or a $6,500 tax credit for repeat home purchasers. I'm happy for them, really. But what's the hoopla about?
The amendment's co-sponsor, Democratic Sen. Harry Reid of the country's foreclosure capital, the great state of Nevada, makes it sound like the Second Coming.

"I am committed to ensuring that more Nevadans and Americans can become homeowners and that this amendment becomes law," Reed said in a statement. Yes, and I'm committed to making sure my husband takes out the trash on Tuesdays. And both events will have about equal impact on straightening out the economy and reducing the deficit.

Let me be clear: This extension means nothing to anyone except the 180,000 deals on the table and the real estate agents hoping they close so they get paid. Not an ignoble goal, but not an earthshaking one, either.

The extension did do something else, though, which is open the door to potential fraud. Critics expressed concerns that people would illegally pre-date contract documents to make themselves eligible for the credit, now that they have more time to close the deal. Feh. A couple of crooks trying to get something past the mighty government doesn't worry me as much as all the things the Senate could have done yesterday and didn't. They could have supported the measure and its other, way more important provisions more enthusiastically.

The amendment to HR 4213, known as the "American Jobs and Closing Tax Loopholes Act of 2010," primarily extends unemployment insurance benefits. Its lackluster support is disappointing: a 60 to 37 vote, mostly along party lines, with only four Republicans backing it and one Democrat opposing. The bill extends the filing deadline for existing unemployment benefits until Nov. 30 and the continues the 65 percent subsidy for COBRA health care premiums for the unemployed. It also keeps paying doctors who treat Medicare patients the same as they were getting.

Those provisions touch the lives of way more than 180,000 people, and all have been attacked as too expensive to continue in other versions of this bill. Now the fun begins, with the Senate resolving the differences between the bills.

As for the tax credit, we can hail it as a success by all accounts. The National Association of Realtors anticipates that about 2.4 million homebuyers will benefit from the credit this go-round, joining the more than 2 million who applied for the first tax credit that ended in November 2009.

Maybe now it's time to show some love to those who can't even get there.
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