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Stimulus Bill Gets Housing Tax Perk
GOP Senators Sought Provision

By Shailagh Murray
Washington Post Staff Writer
Thursday, February 5, 2009

Seeking to jump-start the housing market, the Senate added new tax relief for homebuyers to its $900 billion economic stimulus bill yesterday as the legislation moved toward a final vote.

The amendment, offered by Sen. Johnny Isakson (R-Ga.), represents a significant victory for Republicans. GOP lawmakers have complained that the package includes few of their priorities for easing the economic crisis, including more help for the housing sector, which has been devastated by foreclosures and the frozen credit market.

The Isakson provision would offer a tax credit of up to $15,000 for any home bought as a primary residence, for one year after the stimulus bill is signed into law. It would add $19 billion to the plan.

The housing amendment, accepted unanimously by a voice vote, also represents an effort by Democratic leaders to make the stimulus bill more appealing to Republicans -- a necessity in the Senate, where Democrats lack the 60 votes needed for final passage.

A bipartisan group of moderate senators is expected to announce an amendment today that would remove tens of billions of dollars in spending provisions that have been criticized as not being able to immediately stimulate the economy.

Majority Leader Harry M. Reid (D-Nev.) said a final vote on the Senate package could come as early as tonight. But compromise negotiations with the House are likely to extend through next week and could prove contentious, as the Senate bill grows in some areas and contracts in others, compared with the $819 billion House package.

Also last night, the Senate moved unanimously by voice vote to tone down a controversial "Buy American" provision that had sparked an uproar among foreign leaders who cautioned that it could lead to a trade war. The new language would add the caveat "applied in a manner consistent with U.S. obligations under international agreements" to a requirement that public-works projects funded by stimulus money use only American-made materials.

The House stimulus package, approved last week, includes a provision that would mostly bar foreign steel and iron from the infrastructure projects funded in the bill. Before modification, the Senate version went further, requiring -- with few exceptions -- that all stimulus-funded projects use only equipment and goods made in the United States.

The provision also ignited opposition from some leading U.S. corporations with extensive international sales; they warned that passage of the Senate measure would lead to retaliation. U.S. labor unions, as well as the steel, iron, textile and other industries, strongly supported the Senate language, arguing that placing more restrictions on goods would create more U.S. jobs. They dismissed the argument that it would violate some international trade agreements.

But the Buy American effort lost momentum when President Obama criticized it. Although he has not ruled out support for a milder version, he has asserted that now is not the time to "signal protectionism." He told ABC News on Tuesday night: "I think that would be a mistake right now." He called the provision "a potential source of trade wars that we can't afford at a time when trade is sinking all across the globe."

Staff writer Anthony Faiola contributed to this report.

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