HUD wary of extending home buyer tax credit
WASHINGTON - The Obama administration is still considering whether to back a popular tax credit for first-time home buyers but is skeptical the United States can pay for it, Housing and Urban Development Secretary Shaun Donovan said yesterday.
Donovan told the Senate Banking Committee he was aware the program was popular with lawmakers, but added that "at the same time, I am mindful that these proposals can be very expensive, especially at a time of significant budget deficits."
The new home buyer $8,000 tax credit, which expires Nov. 30, has boosted home sales in recent months, helping to revive a flagging housing market that had been a key factor driving the United States into a recession.
Banking Committee Chairman Christopher Dodd (D-Conn.) and Sen. Johnny Isakson (R-Ga.) want Congress to extend the credit through next June.
Isakson told the panel that failure to extend the popular tax credit would lead to "a dramatic and awful situation in the United States of America." Under questioning, Donovan said the administration would make a decision in the coming weeks after it sees more government data on just how much the tax credit would cost.
But he was much less dire in his predictions for the housing market if the tax credit is not extended. "I do not believe that a catastrophic decline [in the housing market] would be the result of the end of the credit," Donovan said.
Isakson is seeking to attach a bill to extend the credit and expand it to cover repeat home buyers.
Meanwhile, the Internal Revenue Service is fighting potentially widespread abuse of the popular tax credit. The agency has opened 107,000 examinations of questionable claims and identified 167 criminal schemes involving the tax credit since it was expanded as part of the economic stimulus package enacted in February.
Lawmakers said Tuesday that they might add protections to help prevent fraud. With AP
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