Lobbying gets housing help

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By Julie Hirschfeld Davis ASSOCIATED PRESS

Emergency help for the jobless should be a huge windfall for Realtors, home builders, mortgage bankers and others, and that's no accident.

Those industries have spent months and millions of dollars making the case for $20 billion in tax cuts for homebuyers and businesses to help create jobs and revive a sluggish housing market. Their lobbying campaign paid off last week when Congress voted to pass the tax breaks as part of a broader extension of unemployment benefits. President Obama signed the bill into law Friday.

The legislation, which provides up to 20 weeks in additional pay to more than 1 million people who have lost or are in danger of losing jobless aid, passed by overwhelming bipartisan margins.

It also would extend until the spring a tax credit of up to $8,000 for first-time homebuyers that had been slated to expire at the end of the month, add smaller credits for some who own a home, and make the money available to wealthier people. The popular tax break is estimated to cost $10.8 billion over the next decade, and businesses that stand to benefit have flooded Capitol Hill in recent weeks to push it through.

Realtors mobilized their 1.2 million members across the country to write to and call their representatives and senators to urge extension of the credit, warning that failure to do so could cause this year's housing market uptick to grind to a halt.

Several dozen flew to Washington recently to visit members of the House Ways and Means Committee and the Senate Banking, Housing and Urban Affairs Committee to press the point. In case they didn't get the message, Realtors sent more than 500,000 letters to Capitol Hill and made nearly 13,000 phone calls to Senate offices last weekend to corral support in advance of a key procedural vote Nov. 2, according to a spokesman.

"There are Realtors everywhere who understand the impact of the tax credit to moving the housing market," said the National Association of Realtors' Lucien Salvant.

Lawmakers tend to listen to the politically active group. Public disclosures show Realtors have spent nearly $14 million lobbying Congress so far this year, and their political action committee gave about $12 million to candidates in the last election, according to the federal campaign finance records compiled by the Center for Responsive Politics.

Sen. Johnny Isakson, Georgia Republican, an architect of the tax credit, was a Realtor before he was elected. He was instrumental in pushing through the original credit as part of housing legislation last year and extending it in the stimulus bill enacted in February.

Among the other prominent boosters of the homebuyer break were the National Association of Homebuilders and the Mortgage Bankers Association, whose members depend on robust housing sales to survive. They joined real estate agent groups in arguing that letting the tax break expire could drag down a weak economy.

Bill Killmer of the National Association of Homebuilders called the credit "a pretty powerful tool" in getting people contemplating buying a house to "move to yes and be motivated" to close the deal. Like the Realtors, home builders have been citing the tax credit in their marketing campaigns, using the government subsidy to propel their "buy now" message.

There have been bumps in the road, including a recent audit by an Internal Revenue Service watchdog — released just as momentum was building for renewing the credit — that detailed mistakes, questionable claims and criminal schemes in the program. Proponents of the tax break scrambled to assuage lawmakers' fears and were quick to voice support for adding anti-fraud measures to the legislation.

"It was something that caused the Congress to step back," Mr. Killmer said of the IRS report, but home builders urged lawmakers not to abandon the credit, and in the end, he said, "They didn't throw out the baby with the bathwater."

Nor did cost concerns — a huge issue as Congress grasps for an agreement on a costly health overhaul — derail the measure in the face of determined lobbying by business groups. Along with the homebuyer credit, the package contains another $10 billion tax break that allows companies that suffered during the past two years to use recent losses to reclaim taxes paid in the previous five years, when times were good.

Big businesses that were cut out of that tax break when it was included in the stimulus measure early this year lobbied Congress to let them take advantage of it this time. They included retailers and manufacturers, among others, who said the measure would propel employment.

"If retailers can't find a way to finance inventories for the 2009 holiday season, many could be forced to close stores, lay off workers or even go out of business," said Rachelle Bernstein of the National Retail Federation. "This will help keep that from happening."