Wednesday, April 29, 2009

U.S. Senator Johnny Isakson (R-GA)
Floor Statement on the Housing Market and the Budget
Remarks as Delivered on the Senate Floor

Mr. ISAKSON. Mr. President, I thank the Budget chairman for a lot of things. One is his openmindedness. But I particularly thank him for the closing he presented because it relates directly to the subject I would like to discuss, but I would like to yield to the chairman to ask him two questions to make sure I am accurate about the conference report. First, it is my understanding that there is a $634 billion account set up for health care; is that correct?

Mr. CONRAD. Mr. President, answering through the Chair, that was in the President's budget. We did not provide for that in this conference report. What we did provide for is a deficit-neutral reserve fund. We did not specify an amount that would be necessary for health care because we do not know whether the right number is $200 billion, $400 billion or $600 billion, as the Senator referenced. What we do say is whatever that number is, it has to be dealt with in a deficit-neutral way. It has to be paid for.

Mr. ISAKSON. I thank the chairman. Second, is it not true that the amendment the Senate unanimously adopted that set forth a deficit-neutral account of $34.2 billion for a housing tax credit was deleted from the conference report?

Mr. CONRAD. The Senator is correct.

Mr. ISAKSON. I thank my distinguished chairman.

I wish to make my remarks not to the Senate. I commend the chairman and the Senate for adopting the amendment as we did on the floor 3 weeks ago. I wish to direct my remarks to the President of the United States, to Dr. Summers, to Dr. Christina Romer, the head of the Council of Economic Advisers to the President, to Secretary Geithner, and my friend, Rahm Emanuel. I wish to make a case for what the Senate did, which is deleted from this budget resolution, and I wish to start it looking back 15 months ago.

Fifteen months ago, when we came in, in January of last year, we were beginning to see foreclosures, beginning to see the housing market decline, and I introduced at that time, along with other Members of the Senate, a housing tax credit for the purchase of foreclosed and vacant houses. It was scored at a cost of $11.4 billion. The Finance Committee rejected that amendment in the Senate, saying it cost too much.

Ninety days later, the Senate passed a $150 billion economic stimulus bill recommended by President Bush that gave every American $300, or up to $1,200 per family, to stimulate the economy--and the economy spiraled down.

In July of last year, we dealt with a housing bill that created HOPE for Homeowners and an FHA program expansion. I tried to amend that with a housing tax credit and, to the credit of the House and Senate, the conferees ended up creating a $7,500 interest-free loan for first-time home buyers. It did not work, but it was a sincere effort to try.

Then we came back this year and Senator Lieberman, myself, and others reintroduced the $15,000 tax credit for any family who buys and occupies their home, any single-family residence in America, for at least 3 years. The tax credit of $15,000 is a substantial incentive. It is tied directly to exactly what happened in this country in 1975, when America offered a $2,000 tax credit for anyone to buy any one of the 3 years' worth of standing vacant inventory that was on the market in the United States. We passed it at that time and exited that recession within 12 months, restimulating the housing market which had led us into that particular recession.

It is housing that led us into this recession and it is housing that is causing precisely what the chairman referred to and that is the deflation that is going on in the United States of America. One in five homes today is underwater, meaning they owe more on their home than it is worth. The equity lines of credit have been wiped out. Families' basic major estate and their net worth has been wiped out and the housing market continues to be a collection of short sales and foreclosures.

The current tax credit we have, which is now $8,000 to a family as long as their income doesn't exceed $150,000 and as long as it is their first home purchase, is a fair effort to start, but our problem is not with first-time home buyers. Our problem is with move-ups, with transferees, people who have been playing by the rules, making their payments. If they are transferred, they are afraid to take the transfer because they are afraid they can't sell their house, and they are afraid there is no buyer incentive to help get them there. I urge the President, Dr. Summers, Secretary Geithner, Dr. Romer, and Rahm Emanuel to consider this: That $15,000 tax credit, if it were passed today in America for 12 months, would cost, as scored by CBO, $34.2 billion. How much is $34.2 billion? It is 5.4 percent of the President's set-aside of $634 billion for health care. It is one one-hundredth of 1 percent of the $3.5 trillion budget--one one-hundredth of 1 percent of the amount of the budget.

Don't you think we could provide an incentive that is that inexpensive to motivate a housing market to return, to begin to reflate values back and put equity in the pockets of the American people and return our economy?

Experts have estimated--and I am not saying I am an expert, this is experts who have estimated--that if that tax credit had passed last year it would have created 700,000 home sales and 587,000 jobs. Mr. President, 587,000 jobs is the number of jobs we have been losing a month. We need to find a way to create that kind of number.

More important, let me give you the intriguing fact about the 700,00 house sales. Current home sales in America are at 500,000. An average year in this decade in this country was 1.2 million, a good year was 1.5 million. If you add that estimated 700,000 produced by the credit to the existing 500,000, you would return the United States to a balanced housing market. You would begin to appreciate the value of those houses back to where they were. You would restore equity lines of credit for the men and women of the United States of America. You will employ people in the construction industry.

My last point is very important. This housing recession and the difficulties in it now are in the developed lots that are standing, developed and unsold, and the A, D, and C loans that have been made by the major banks funded around the country to fund those developments. Those loans are beginning to come due. They are threatening the integrity of the U.S. banking system, and there is only one thing that will solve that and that is for those lots to begin to be absorbed. The only way to do that is to get house buyers back in the market with an incentive to come back in and buy.

If the tax credit passed, we do not have that much of a vacant inventory available in the country. It would immediately stimulate the employment of construction workers to go into homebuilding.

My thanks to the Senate for its wisdom in adopting the $15,000 credit. I express my deep disappointment in the conference committee dropping it, and I encourage our President and the leadership of our country to give a second thought to what this credit could do. It seems to me one one-hundredth of 1 percent of the budget is worth a gamble to create almost 600,000 jobs and 700,000 home sales, restore equity lines of credit to America's families and, most important of all, reenergize the great engine that is the American economy. The greatest stimulus in the world is not a gift of money, it is an incentive to invest and for American families to return their confidence in this great economy we have in this great country.

I urge the leadership of the country to consider that. I, again, thank the chairman of the Budget Committee and every Member of the Senate for their unanimous support of it, and I yield the floor in sincere hopes that when this speech goes to the White House they will read it, they will check the numbers, and they will ask the question: Is one one-hundredth of 1 percent of this budget worth the chance to restore the economy of America?