Proposed legislation that would provide consumers with a $15,000 tax credit for home purchases to stimulate the depressed U.S. housing market is seen as having very little chance of getting through Congress.
On Wednesday, Republican Sen. Johnny Isakson said that his proposal would nearly double an existing tax credit for first time home buyers and loosen the terms of that incentive.
The current $8,000 tax credit, first passed in February as part of a $787 billion fiscal stimulus plan, is limited to first-time homebuyers and expires at the end of 2009. The new plan would expand eligibility to all homebuyers and increase that credit to $15,000.
One in two sales made every day is a short sale or a foreclosure, Isakson said in a statement about his proposed legislation. 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, said the Georgia Republican.
But some analysts say the chances of the legislation passing through both houses are slim because of stimulus fatigue.
There is bailout burnout across the country, said Brian Gardner, senior vice president for investment bank Keefe, Bruyette& Woods' Washington research team. There's an argument for the stimulus, but the possibility of the bill passing is unclear.
The plan's substantial costs could also present a roadblock to its passage.
Our view is that there's going to be a pretty hefty price tag for this, said Jaret Seiberg, a policy analyst for Concept Capital's Washington Research Group. We estimate a cost of no less than $30 billion and in an era of record deficits, it will be hard for lawmakers to accept that cost.
The legislation also seeks to extend the deadline of the tax credit by one year and would open the credit to high-income homebuyers by eliminating income restrictions.
The National Association of Realtors and National Association of Homebuilders support the bill and argue that it would help reduce foreclosures, erase the overstock of homes and stabilize property values.