The new credit has been approved by the Senate and included in their version of the stimulative package. If the Senate approves the bill, then the Senate version must be reconciled in a joint committee with the House stimulative package passed last week - then the reconciled version would be voted on separately by each house of Congress - the House of Representatives and the Senate - before finally going to the President's desk for signing. So we've still got a ways to go, but this new provision should survive the process.
From The New York Times this evening:
Aides to the majority leader, Senator Harry Reid of Nevada, suggested that a final vote on the stimulus plan could come as early as Thursday. If the Senate approves the stimulus, the final legislation must still be reconciled with the $820 billion measure approved last week by the House.
The tax break for homebuyers, which the Senate approved by voice vote without opposition, was the second amendment in two days aimed at encouraging consumers to make major purchases.
Apparently the Senate bill also provides incentives for new car purchases:
On Tuesday, the Senate approved a tax incentive for car buyers, sponsored by Senator Barbara Mikulski, Democrat of Maryland, that would allow the deduction of sales tax and loan interest on purchases made this year.
One thing is beyond debate: the solution to stimulation is effective spending. Period. Whether the private sector uses incentives to spend when it otherwise would not, or whether the government uses its massive broad powers to spend and create and save jobs, stimulation depends on effective spending that creates jobs. That's how the virtuous cycle begins, if it is to begin at all. The risk is not going big enough or not being effective enough. So far I think both bill versions are shaping up to be reasonable all together, and President Obama was correct to say today that we must not let the perfect be the enemy of the necessary.
More on the housing credit:
The measure would give buyers a tax credit of 10 percent of the price of a primary residence purchased within the year, up to $15,000, and is designed to stabilize plummeting home prices that caused a wave of foreclosures and led to the near collapse of the financial system as Wall Street firms wrote down billions in losses on mortgage-backed assets.
While many potential home buyers still will not qualify for newly restrictive loan standards, such a credit should give incentive to those who do have qualified credit and want to take advantage of a good buying opportunity. While this market is not a buyer's market (mostly due to broad credit and economic troubles), there are good values to be had for able buyers.
And right now, we need every capable buyer to be in the market.