A House-Senate conference yesterday negotiated a $3 billion quick-fix bill to bolster the devastated housing industry, completing work on "urgent" supplemental appropriations legislation for fiscal 1982.
But the housing subsidy program, the one major piece of anti-recession legislation passed in Congress this year, may end up bogged down in a continuing controversy over a particularly ticklish issue: tax deductions for members of Congress.
In addition, President Reagan has threatened to veto the appropriations bill because of the housing assistance plan, which involves federal payments of 4 percentage points of an eligible homebuyer's mortgage on a newly built house.
The House on Wednesday seemed to have resolved the tax break issue by agreeing they would have to repeal a provision that lets members of Congress take a $75-a-day deduction for living expenses without documenting the expenses. Instead, Congress would return to a flat $3,000-a-year deduction for expenses.
But it proved to be too much for the House conferees to swallow without retaliation against the Senate, which had added the repeal to its version of the appropriations bill.
House conferees charged that the Senate could afford to look righteous on the tax deduction issue because senators are not constrained in the amount of outside income they can earn from speeches or other activities. Then the House conferees voted to accept the return to the $3,000 limit on expense deductions--but added language to limit the outside income of senators.
Tempers flared in the process. Rep. Silvio O. Conte (R-Mass.) pounded the conference table and accused the Senate of being full of "fat cats" who have "ridden roughshod over the House for a long time." Sen. Jake Garn (R-Utah), an opponent of the tax break repeal, retorted that those who voted for it were "gutless . . . .phonies" and charged the press with being "goddamned barracudas" that intentionally misrepresent the issue to the public.
Sen. William Proxmire (D-Wis.), author of the repeal amendment, was not a favorite among the conferees yesterday, either.
"You used this vehicle for political purposes because you're running this year," Garn yelled at one point. "You're wrong," bellowed Proxmire in return.
The result is that the conference report goes to the House and Senate with a technical disagreement remaining to be resolved. If neither side backs down, it could take some time to negotiate, and the rest of the appropriations bill would be held up in the process.
The housing assistance compromise provides for $2.5 billion in interest-rate subsidies for families who buy homes built after the bill becomes law and another $400 million for already-built but unsold new homes. Another $100 million would be earmarked for subsidies for higher-income persons in high-cost areas such as Washington, D.C. All of the funds would have to be committed by the end of this year, but the subsidy would be provided for five years.
The 4 percentage point interest rate subsidy would mean, at today's FHA rates, an 11 1/2 percent rate for five years on mortgages for about 250,000 moderate-income families. Homebuyers would have to repay the subsidy--which could be worth as much as $13,245 over the five-year period--when the home is resold or refinanced.
Sen. Richard G. Lugar (R-Ind.), author of the original legislation, still hopes to convince the president to sign the bill as a jobs-creation measure, estimating it would put half a million people back to work in housing-related industries. The unemployment rate now is 9 1/2 percent with about 10.5 million persons out of work.
The president has said he opposes "bailout" bills for particular industries, however, and still is expected to veto this proposal.
The appropriations bill also includes monies for operations in various government agencies through this fiscal year, which ends on Sept. 30.