President Reagan yesterday vetoed an "urgent" supplemental appropriations bill as too costly and in the process killed Congress' $3 billion quick-fix program for the housing industry, this year's only piece of anti-recession legislation.
The House then sustained the president's veto of the $8.9 billion bill in a 253-to-151 vote that fell 17 votes short of the necessary two-thirds needed to override. Republicans lined up with the president, and Democrats said they would make the veto a leading issue in the fall campaigns.
Congress then quickly sent the president a second version of the measure, stripping off the mortgage-interest subsidy program that Reagan opposed as an expensive "bailout" of the housing industry. But that bill still includes $1.3 billion more than the president wants for emergency funding of various agencies and programs, and the White House said Reagan intends to veto it as well. That veto is likely today.
Anticipating that possibility, the House yesterday approved a third version that gives the president just what he wants. The Senate plans to take up that measure next week.
All of the measures would repeal a $75-a-day tax deduction for living expenses that members of Congress voted themselves last year, returning to the old system under which legislators could take a flat $3,000 as business deductions. However, House members backed down on an amendment to limit senators' outside income to $18,200 a year--what congressmen are allowed--because it looked as if that provision could tie up the bill indefinitely.
"We will not promote a housing recovery by going even deeper in debt," the president said in his veto message. "More red-ink spending will only make the housing recession worse."
The housing industry immediately criticized the veto. Fred Napolitano, president of the National Association of Homebuilders, which lobbied hard for the housing measure, said, "The president's veto message should be interpreted this way: If you are jobless, homeless or going bankrupt, don't look to the White House for help."
Democratic leaders made it clear yesterday that Democratic candidates would make political use of the killing of the housing program as they campaign against the president's economic policies.
"The consequences should be very severe for anyone who voted for the housing bill in the first place and then cowers and cringes and genuflects and kisses the president's, uh, ring," said House Majority Leader James C. Wright Jr. (D-Tex.) when asked what would happen to those who switched from earlier support.
Under the program, the federal government would have paid 4 percentage points of the mortgage interest rate, to no lower than 11 percent, for moderate-income buyers of new homes. Soaring interest rates have put homebuying out of reach for most Americans, and the housing industry is in its longest and deepest downturn since the Depression.
Reagan said in his veto message that the housing program would set a bad precedent for other beleaguered industries and would not stimulate significant new building or create many jobs. Moreover, he stressed his belief that cutting the federal deficit is the best way to promote economic recovery."This government must convince a skeptical country--the business community, taxpayers, investors and workers--that lasting recovery is a fundamental commitment that will not be derailed by a return to excessive federal spending and borrowing."
He also contended that an economic recovery is under way, citing a rise in housing starts and permits.
But Wright noted that unemployment, inflation and interest rates are all in double digits and that no sign of recovery is in sight. "Where has the president been? Has someone failed to awaken him?" he asked. The administration merely wants to "sing hymns to help the unemployed."
The House first passed its version of the housing quick-fix bill, 349 to 55, on May 11, with 135 Republicans voting with the majority. But yesterday House Republicans split 131 to 53 in favor of sustaining the president's veto.
Minority Leader Robert H. Michel (R-Ill.), who voted against the bill the first time around, said the override vote was "the first test of our seriousness" to hold down the deficit after approving a budget resolution. Even though that resolution includes money for the housing measure, Michel said Wall Street is already skeptical that Congress can stick to the $103.9 billion deficit it sets.
The second "urgent" supplemental bill sent to the president yesterday provides $2.4 billion for sewer construction grants, $1.3 billion for guaranteed student loans, $1 billion for food stamps, money for postage to send out Social Security checks and funding for salaries at several departments and agencies.
It contains $1.3 billion more than Reagan requested, including increases in the amount for student loans, continuation at a low level of a program to build rental housing and funds for highways, flood control and the work-incentive program.
All Maryland legislators except Republican Marjorie S. Holt voted to override the veto, as did five of Virginia's nine Republicans: Stanford E. Parris, Paul S. Trible Jr., William C. Wampler, G. William Whitehurst and Frank R. Wolf.
Voting for the original housing bill but to sustain the veto were Virginia Republicans Thomas J. Bliley Jr., R.W. Daniel Jr. and J. Kenneth Robinson and Democrat Dan Daniel.