Tuesday, June 9, 2009

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

I would like to talk for a minute, if I can, Madam President, about a very important issue. I don't come to the floor all that often, but people will tell you I come to the floor too often to talk about the housing industry. I am going to do it for a little bit tonight because it is critically important to our economy and to our country.

A year and a half ago, I introduced a piece of legislation, in January of 2008, creating a housing tax credit of $15,000 for any family who would buy and occupy their home as a principal residence in the United States. I did so because housing had collapsed, foreclosures were beginning to become rampant and are rampant today. Standing inventory proliferated, builders were going out of business, and our economy was in a downward slide.

The CBO score on that $15,000 tax credit is $34.2 billion, and I was told last January that was too expensive, we couldn't afford to do it. By my last count--Senator Coburn is a better counter than I am--we spent about $5.5 trillion trying to fix an economy that has been in a continual downward slide.

Fortunately, in July of last year, with the help of Members on both sides, we did get a tax credit passed, but it was basically an interest-free loan for $7,500, it was means tested to families who were first-time home buyers or had incomes under $150,000. It did no good.

Later in the year, I finally convinced this body, and we took off the limitation in terms of the payback and made it a real tax credit and raised it from $7,500 to $8,000 and it has made a difference. First-time home buyers used it and the market stabilized, but we don't have a recession in first-time home buyers. We have a recession in the move-up market.

The man who is transferred from Missouri or Georgia who can't sell his house in Missouri, can't come to Georgia, can't take the transfer. The corporation can't afford to buy the house and hold it for him because of the proliferation of inventory that is owned and today in the United States of America one in two sales made every day is a short sale or a foreclosure. That is an unhealthy market, and it is continuing to precipitate a downward spiral in values, loss of equity by the American people, and a protracted, difficult economic time for our country.

Tomorrow, joined by a number of Members of this Senate on both sides, I will reintroduce the $15,000 tax credit that is available to any family or individual who buys or occupies any home in the United States of America as their principal residence with no means test for first-time home buyers, no means test or income limitations. Tomorrow it also will be announced in New York the Business Roundtable has adopted this tax credit as its No. 1 suggestion to the U.S. Government as the one thing we can do to turn around the American economy.

I am getting to be a pretty old guy. I went through the second recession of my career in 1974. Gerald Ford was President, it was a Democratic Congress. America had a 3-year standing inventory of new houses built and unsold. The economy went into a tailspin. Values started to go down. We were in deep trouble.

That Republican President and that Democratic Congress came together and passed a $2,000 tax credit for any family who bought and occupied as its principal residence a new house that was standing and vacant. In 1 year's time, a 3-year inventory was reduced to 1 year; values stabilized, the economy came back, home sales became healthy, and America recovered. That is precisely what will happen this time.

I am not so smart that I figured it out, I am lucky enough that I lived through it in 1974, and 30 years later we need to do the right thing for America and the right thing for our economy and put in a time-sensitive, 1-year significant tax credit for anyone who buys and occupies as their residence a single-family home.

An independent group estimated, when I introduced this last year, that it would create 700,000 house sales and 684,000 jobs this year. I think it is ironic that house sales today are at half a million. A normal to good year in the United States is 1.2 to 1.5 million sales.

If you could get the tax credit and the 700,000 sales that have been estimated it will introduce and add it to the 500,000 sales we have today, it will return our housing market to normalcy. It will stabilize the values of the largest investment of the people of the United States of America. It will recreate equity lines of credit that have dissipated and disappeared in the American family. And over time it will restore our vibrant economy back to the economy we all hope and pray will come.

So I ask all of the Members of the Senate to reconsider their positions in the past and consider joining me in the introduction of this legislation tomorrow. We have three Democrats and three Republicans who have come on board. I would like to see all 100 of us because in the end all of our problems will be more easily solved if the problems of the American taxpayers and citizens are solved, and their biggest problems today are an illiquid housing market, a decline in their equity, a decline in their net worth, and a depression in the housing market that we are obligated to correct if we possibly can.