The article about expanding an $8,000 tax credit for first-time home buyers incorrectly said that the program applies to people buying a home for the first time in three years. The program applies to buyers who have not owned a home for three years before the purchase.
House votes to extend jobless benefits, expand home buyers' tax credit
Friday, November 6, 2009
Congress gave final approval Thursday for an additional $24 billion to help the jobless and support the housing market as climbing unemployment poses a growing liability for elected officials.
The bill, passed overwhelmingly by the House and headed to President Obama for his signature Friday, extends unemployment insurance benefits that were due to expire and renews an $8,000 tax credit for first-time home buyers, while also expanding it to cover many other home purchases.
The legislation represents an effort by Democrats to strengthen the anemic economy. The Senate passed the measure unanimously Wednesday, reflecting the unwillingness to be seen as opposing measures to stimulate growth even among Republicans who are skeptical of greater government spending.
Despite tentative signs of revival in the economy, unemployment continues to pose a challenge to incumbents. A report due from the Labor Department on Friday morning is expected to show another rise in the jobless rate in October -- possibly into double digits.
Congress and the Obama administration are casting about for policies of limited scale to help buttress the economy. Like the "Cash for Clunkers" program enacted this year to promote auto sales, the latest bill has broad popular support even though economists disagree about its value.
Economists generally support extending unemployment insurance. The bill would prolong benefits for at least 14 weeks for people out of work. The jobless in more than two dozen states where unemployment rates exceed 8.5 percent would receive to 20 additional weeks of benefits.
Because unemployed people tend to be strapped for cash, they often spend most if not all of the money they receive as benefits. This in turn tends to give a bigger boost to the wider economy than do many other forms of government spending.
"It's hard to think of any other initiative we can name that is as beneficial to job creation," House Speaker Nancy Pelosi (D-Calif.) said of the unemployment-benefits provision. "Its original purpose is fairness to those workers who have paid into the insurance system, and now they are getting insurance benefits, but it also has an impact as a stimulant."
Benefits for more than 1 million people would have ended without the extension, according to the National Employment Law Project, a nonpartisan group that tracks the issue. More than 15 million Americans are unemployed, more than a third of whom have been out of work for more than six months.
"Given the employment situation and the general bang for the buck you get from unemployment insurance, that's probably the most sensible of the stimulative policies to extend," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
More controversial is the decision to extend and expand the program of $8,000 tax credits for first-time home buyers.
Under the housing program, people buying a home for the first time in three years would receive an $8,000 tax credit if they sign a contract by April 30 and close by June 30. Homeowners who are buying a new primary residence would be eligible for a $6,500 tax credit beginning Dec. 1 if they owned their home for five consecutive years in the previous eight.