New Home Sales *FREEFALL* Down 33% in May, lowest level since 1963…

And Shaun Donovan at HUD was touting the home buyer tax credit as a success and saying housing STABLIZED! AS IF!What flavor would you like with your double-dip? WSJ has it. Hang on Sloopy!

More on the ‘wonderful’ homebuyer tax credit, it was given to inmates serving LIFE sentences, good grief.

Nearly 1,300 prison inmates wrongly received more than $9 million in tax credits for homebuyers despite being locked up when they claimed they bought a home, a government investigator reported Wednesday

The investigator said 241 of the inmates were serving life sentences….

June 23, 2010. Tags: , , , , , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, TARP, Unemployment Statistics, Wall St. Comments off.

Brace for Impact: Team TOTUS comes out for extension of homebuyer tax credit

Update: Marty Feldstein agrees with MiM on the GDP and double dip  (too bad he endorsed Obama and later let himself be used as a tool like Volcker)

Third-quarter growth “was boosted by the various fiscal stimulus policies,” Harvard University professor Martin Feldstein said in an e-mail. “The danger remains of a serious slowdown after this and a possible double dip” of the economy in 2010, he said.

*Montage by Delta1111111

In an apparent  reversal of  sentiment from that expressed by HUD chief Shaun Donovan in his testimony to Congress just weeks ago when he said it was very expensive, the WH is endorsing the extension of the homebuyer tax credit (details at end of post).

IMO this policy reversal, combined with TOTUS’ failure to laud the GDP data today (he merely commented that he is not satisfied as Americans need work) can mean only one thing.

The internal economic projections of the WH team led by Romer rolling stimulus expectations waaaay back last week, are WAY WAY WORSE than expected. They see the double dip coming and are trying to get in front of it with more stimulus spending in an extended homebuyer tax credit which will do what clunkers did,  cannibalize future sales and leave a wider gap in the future with additional deficits.

So MiM’s forecast for artificial GDP bumps in 3Q and 4Q  ’09 may need to be extended into 1Q 2Q 2010 if they are going to keep throwing money at anything that will give a temporary boost to GDP. Of course the coming tax hikes they are building into the system with the deficit they are growing will CRUSH our economy for years to come but that seems to be beyond their timeline, and thus not their concern.

Clearly the goal is political with everything they do, I guess that comes from Rahm. But that being said, I would expect they are playing dice hoping to keep GDP artificially high going into 2010 Congressional mid terms.

Of course since it is not organic GDP growth jobs are not coming with it so I don’t see the payoff in this policy unless they think Americans will look at stock markets and GDP and feel happy despite being unemployed and foreclosed upon? DOW right now, 3:14 pm up 200. It is high on sugar and our economy is a diabetic on dialysis over here! Today is the anniversary of the 29 collapse btw…there was a HUGE rally after that followed by the utter collapse of the economy as a CNBC guest notes now…HA he said sugar high! I said that! I will add this video when CNBC posts it 🙂

Question is, can they pull off this GDP stimulus spending for that long while simultaneously driving down the dollar without a total collapse of our economy from the CRUSHING deficit? We shouldn’t have to even pose that question. This is like giving the car keys to a raging alcoholic after an open bar at their ex’s wedding.

Doubling down on bad medicine.  I am past girding, I am bracing for impact (sadly no Sully at the wheel, we have Pelosi and Reid)..

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Original Post: In an apparent  reversal of  sentiment from that expressed by HUD chief Shaun Donovan in his testimony to Congress just weeks ago when he said it was very expensive, the WH is endorsing the extension of the homebuyer tax credit:

The nation’s top housing official expressed doubt over the need to extend the $8,000 tax credit for first-time home buyers, and said that the Obama administration was reviewing whether the additional cost of extending the credit was worth any benefit in home sales.

Shaun Donovan, the secretary of the Department of Housing and Urban Development, told a Senate hearing on Tuesday that there was “clear evidence” that the tax credit had benefited the housing market. But he said that the “real issue” in considering an extension was whether an extension was worth the cost to the government in lost tax revenue.

The actual cost of the credit won’t be known “until Americans have filed their tax returns,” he said. “And so, we feel it’s very important within the administration that we gather as much data as we possible can in advance of that before we make a final decision.”

This was just 2 weeks ago folks!

Mr. Donovan said that he understood that the impending expiration of the tax credit meant that the administration needed to make a decision soon so that the market could plan accordingly. Mr. Donovan said he didn’t believe a “catastrophic decline” in home sales would result if the tax credit were allowed to expire on Nov. 30, though he said that an expiration could have some “negative implications” for the market….

And today they send out Geithner to say EXTEND THE TAX CREDIT!

Bloomberg:

The Obama administration endorsed plans to extend an $8,000 tax credit for first-time homebuyers, saying it is helping stabilize the nation’s housing market.

The tax break, enacted earlier this year as part of an economic stimulus package, has “brought new families into the housing market and contributed to three consecutive months of rising home prices,” Treasury Secretary Timothy Geithner said today in a statement. The tax break will expire Nov. 30 unless Congress intervenes.

Senate Democrats have announced plans to extend the credit until April 30 while expanding it to include higher-income Americans and some who already own homes.

Senate Finance Committee Chairman Max Baucus said today the new plan would offer a $6,500 credit for homebuyers who have lived in their prior residence for at least five years. Couples earning up to $225,000 and individuals up to $125,000 would qualify for the break, Baucus said. That’s up from the current $75,000 limit for individuals and $150,000 for couples.

“The success of the American economy is closely tied to the success of the housing market – by helping to stabilize the housing market, the homebuyer tax credit has helped to shore up the economy as it begins to recover,” said Baucus. “This would enable an even greater number of potential homebuyers to take the credit.” Millions of renters earn more than $75,000, he said.

Here’s a question for good ole Max who initially balked at this spending: What will happen to all those rental property owners whose tenants you claim will buy houses? What about the people who work for those property owners? Unintended consequences. All the government can do is steal one man’s profit and give it to someone else. They do not CREATE anything. Only private capital CREATES JOBS. My God I sound like Larry Kudlow. My dad is smiling in heaven.

Democrats have been pushing to include the provisions in an unemployment benefits bill, which has been held up by a disagreement with Republicans over other proposed amendments….( read the whole thing).

October 29, 2009. Tags: , , , , , , , , , , , , , , , . Economy, Finance, Foreclosures, Housing, Obama Administration, Politics, Popular Culture, TARP, Taxes, Unemployment Statistics, Wall St. 4 comments.

Update: Reid:deal reached on expanding homebuyer tax credit–UE vote within 24 hours; Unemployment Extension Update: Reid now trying to put homebuyer tax credit back in UE bill?? Senate to proceed to UE bill @930am EST; Bill passes cloture 87-13

Update 5: 11/2 newer new thread following UE vote here

Update 4: New thread following UE vote here

Update 3: 430pm EST: Breaking on CNBC- Diana Olick says Harry Reid’s office confirms a deal has been reached on the homebuyers tax credit, It WILL BE EXPANDED AND EXTENDED to include more than 1st time buyers, and IT WILL BE ATTACHED TO THE UE EXTENSION BILL

Reid says he expects a vote on said UE bill WITHIN 24 HOURS.

More as it becomes available…

(Diana Olick’s RealtyCheckBlog, earlier compromise report with details, details moved to Housing Update post.)

(more…)

October 23, 2009. Tags: , , , , , , , , , , , , . Economy, Finance, Labor Department, Obama Administration, Politics, Unemployment Statistics. 11 comments.

Update: GOP proposes amendments for housing tax credit and Dems Johanns and Nelson propose amendment banning ACORN from any federal funding; Unemployment Update: Extension still stalled in the Senate…

10/23 See Update https://moderateinthemiddle.wordpress.com/2009/10/23/unemployment-update-senate-cloture-vote-on-unemployment-extension-next-tuesday/

Update: The Hill:

(…)Since early October, Senate Democrats have been looking to quickly push through a bill that would extend jobless benefits by at least 14 weeks. But Republicans have blocked the immediate consideration of the bill on the Senate floor, objecting because the Congressional Budget Office (CBO) has yet to score it and because a voice vote would preclude GOP amendments….

…Republicans said that a quick vote on the bill would have precluded Isakson’s amendment and others that have bipartisan support. Nebraska Sens. Mike Johanns (R) and Ben Nelson (D) are pushing for an amendment banning all federal funding for ACORN.

Senate Republican Whip Jon Kyl (Ariz.) dismissed Democratic suggestions that Republicans are the “party of no” for holding back support on the bill.

“I think when all is said and done, you’ll see a lot of support for unemployment extension. That’s not the issue,” Kyl told reporters. “The question is how you pay for it. The question is what is the score for it, and whether some other amendments will be allowed.”

Democrats plan to find the extra revenue by extending by 18 months the federal employment surtax, paid by employers and set to expire at the end of the year. The CBO expects the extension of jobless benefits to cost approximately $2.4 billion, according to a Democratic aide.

GOP senators, hoping to avoid a tax extension, are planning amendments that would pay for the prolonged jobless benefits by using bailout or stimulus money, according to a Senate Republican aide.

The Indpendent reports an E Verify amendment is also coming to the floor:

(…)The stalling of legislation to expand unemployment insurance (UI) has little to do with the benefit itself. First, there’s a push to attach an extended homebuyer tax credit to the bill — something the Obama administration is wary of.

But also there’s this: Republicans are hoping to attach a number of amendments related to ACORN and immigration — provisions that have delayed floor action on the UI bill indefinitely, according to the offices of both Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.).

The agreement ends after that.

The Republican amendments include at least two provisions related to ACORN; one related to the E-Verify program; one to pay for the UI benefits with unspent stimulus money; and one providing tax relief….

fiddling-while-rome-burns

Update: Courtesy of James McConnell at the Chicago Economic Policy Examiner:

Democratic politicians will hold a press conference Tuesday to blast Republican politicians for holding up legislation to extend unemployment benefits another 14 weeks for the nation’s out of work citizens. Elected representatives in both houses of Congress have agreed on the details of a bill and apparently have the votes to pass it, but Republicans blocked passage by unanimous consent, and continue to offer what Democrats characterize as unrelated amendments…

(more…)

October 20, 2009. Tags: , , , , , , , , , , . Economy, Finance, Foreclosures, Labor Department, Obama Administration, Politics, Unemployment Statistics. 4 comments.

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