American Housing Rescue and Foreclosure Prevention Act of 2008
Floor Speech
AMERICAN HOUSING RESCUE AND FORECLOSURE PREVENTION ACT OF 2008 -- (Senate - June 19, 2008)
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Mr. GRASSLEY. Madam President, for the benefit of my colleagues, I know there is no time limit, but I don't think I am going to take more than 15 minutes and maybe less than that. It is kind of a rough guess, but I do not intend to take a lot of time.
I wish to start by thanking Chairman Baucus for his courtesy and hard work in the legislative effort that is part of this banking bill, the part that came out of the Finance Committee, the part of the bill that is hopefully going to help the mortgage problem through amendments to the Tax Code. Our goal in the Finance Committee was to develop a bipartisan tax package that responded to the needs of Americans and, in particular, the housing market. We have done so. I wish to take this opportunity to thank Senator Dodd and Senator Shelby because they have worked very closely with us in making sure our Finance Committee part of this bill can, in fact, be a part of the bill that is before the Senate.
Everybody knows Americans are struggling to keep their homes and, with that, their jobs. Economic conditions are very uncertain. In uncertain times, it is appropriate that Congress develop tax policy addressing the housing problem and try to bring a little more certainty to the economic lives of our citizens. After all, the housing problem is at the root of our current economic turmoil.
Last year, we responded to the call for help. Congress enacted the Mortgage Debt Relief Act of 2007, which was signed into law by the President. This law excludes from income discharges of indebtedness incurred by taxpayers to acquire homes. It also extends the tax deduction for mortgage insurance premiums.
Earlier this year, Congress acted quickly on a stimulus package that delivered additional relief to the American taxpayers. That stimulus package is just now taking effect as taxpayers have received these rebate checks, because they are necessary to give the economy a much needed boost.
Earlier this year, the Senate acted on a bipartisan tax relief package that was based on the joint efforts of Finance Committee Democrats and Republicans--in other words, almost by unanimity, a bipartisan bill. The package before us as part of this housing bill is a blend of the Senate package and a House package passed a little while ago by the other body. We have carefully balanced this tax relief package being considered today on the floor, hopefully balanced it enough that it will not run into problems when it gets back to the House because certain House tax policy leaders have agreed to it.
It addresses the housing downturn but is limited so as to ensure that it helps the problem and does not create new problems. Too often, we in Congress have to be certain we do not do things too good, that we create more problems than we solve. We are mindful that any relief that benefits one sector of the public does so at the expense of another sector. The other sector, then, is the taxpaying population that carefully manages their family's budget, especially as it relates to housing costs because of the American dream of owning your own home.
Taxpayers bear the burden of a bailout of these risky mortgages that went south, so it is very important that we have a compassionate view that recognizes that taxpayers pay the ultimate tab. As we proceed to this bill, we need to keep in mind that very worthwhile principle. We need to address the housing downturn, but we need to show restraint and we need to limit the relief so that it eases the problem and does not simply create new problems. We need to be considerate of many Americans who work hard to save and buy homes and who will ultimately pay the price of this relief.
Once again, the Senate is stepping up to the plate. The tax relief package that is before us helps encourage home ownership but also provides targeted relief to homeowners who are looking to work out of this rough patch they are in when they face foreclosure or nearly face it.
The centerpiece of this bill is a temporary $8,000 tax credit to help first-time home buyers buy homes, including homes that are in foreclosure. There is a glut of homes on the market. The glut is depressing home values. It is important that this excess inventory is moved so that we help retain home values of others who are not in foreclosure or have been foreclosed on.
On that point, I think it is necessary for all of us to show praise and respect for the efforts of Senator Isakson from Georgia for doggedly pursuing this proposal. He has a very important and understanding background as a realtor and homebuilder. He helped us shape the proposal.
The bill also increases the cap for mortgage revenue bonds to give people with distressed loans additional options for refinancing. I wish to make it clear that this is not a bailout for homeowners. Instead, this is a provision which helps enable people to keep their homes and to pay their mortgages. We can thank the leadership of Senators SMITH and KERRY for this important provision.
Chairman Baucus has championed the nonitemizer deduction for part of the real property tax paid. It is in this bill. Senator Kyl wanted assurances that State and local tax authorities would not pocket this new tax benefit with higher property tax assessments. This proposal is designed to ensure that property tax payers, not State and local governments, receive the direct benefit of this deduction.
This bill contains a set of reforms to the low-income housing credit. Senator Cantwell led this effort.
A key additional reform benefits low- and middle-income military personnel who need housing near bases where they are stationed. Senator Pat Roberts, a former marine, looked out for our men and women in uniform. Senator Roberts needs a thank-you for that. With Senator Roberts' proposal, soldiers and their families in Fort Riley, KS, and other bases that have seen recent increases in population will have easier access to low-income housing.
This bill liberalizes the ability of the Federal Home Loan Banks to provide assistance to colleges and universities affected by the subprime mortgage crisis. The Home Loan Bank officials in my home State of Iowa suggested this proposal, and I was glad to pursue it and glad it is included.
Senator Harkin, this Senator, and other Members from the Midwest have witnessed the terrible weather that hit our States recently.
We have seen the damage that has been done to our communities large and small, urban and rural in our home States. It is a devastating flood. Unfortunately, the damage goes on as I speak, only a little further downstream. All the hurt has not been calculated at this point. Once again, I have to thank Chairman Baucus for pledging to help us in the Midwest. Senator Baucus came to me and offered that help. That is something the people of Iowa and the Midwest appreciate. Having the chairman of a very important committee in the Senate on your side is important. We will not forget that.
In this bill, we have a proposal specifically targeted to help people who have lost their homes to the floods. The proposal is contained in the mortgage revenue bond package. It is patterned after a proposal adopted over a decade ago to deal with floods from the mid-1990s.
The proposal would waive the first-time home buyer requirement and lift the individual income limits. With this policy in effect, States such as Iowa, Wisconsin, Illinois, Indiana, Missouri, and Maine will be able to offer low-interest loans to families who have lost their homes to the flood. With the proceeds from these loans, families will be able to purchase replacement homes. The elements of the low-income housing reforms will also help disaster-devastated communities.
While I was thanking Senator Baucus, I suppose I ought to extend that beyond Senator Baucus to several other Senators. I better not name them because several have come up, and I will forget somebody. But they have come up to show their understanding of how serious it is in the Midwest and have offered their help. Some of these Senators in previous years have gone through the same destructive natural disasters the Midwest is going through at this very minute. I have informed Chairman Baucus and the leadership on both sides that the coalition of member States affected by these floods and tornadoes will refine more tax proposals in the future. We will aim to assist displaced persons and rebuild the businesses and communities affected. We will seek to offer them to this bill once it is open for amendment.
I spoke in recent days on the issue of revenue-raising offsets to tax relief. I rebutted the claims of Democratic lobbyists who were surprisingly cited in some press reports as credible sources for the Senate Republican conference. The Democratic lobbyists claimed that Senate Republicans would oppose all revenue-raising offsets. Some described our position in terms of ``theology.'' I corrected these assertions and pointed back to Senate floor debates on this point late last year. For some reason, those statements in the Congressional Record have been ignored, and Democratic lobbyists' views were substituted. The correct position is as I restate it now. I ask some folks to pay close attention so we don't get misunderstood.
Principle No. 1, if a revenue-raising proposal makes good policy sense, Senate Republicans will support it. Principle No. 2, the revenue raised should be used for new tax relief. Principle No. 3, the revenue raised should not be required for extending current law tax relief. I have explained the reasons behind that principle. Suffice it to say that we on this side don't believe in sliding down a slippery slope of guaranteeing higher taxes and higher spending. Spending drives current and future deficits.
This bill confirms the Senate Republican conference principles on the use of revenue-raising offsets. This bill contains new tax policy. This new tax policy is offset with revenue raisers that a bipartisan majority in the Senate consider improved tax policy. The main one would put in place a reporting regime on credit card payments to merchants. It is a Treasury tax gap proposal. The other significant revenue raiser would clarify the home sale exclusion rules for second homes, usually where vacation residences are involved. The revenue losses related to disaster assistance, however, are not offset. That accounting is consistent with the bipartisan congressional practice on emergency spending and tax relief.
It has long been said that the American dream is to own your own home. Unfortunately, the subprime mortgage crisis has turned that dream into a nightmare for many Americans. The bipartisan tax relief provisions from the Senate Finance Committee that have been worked out in a bipartisan way--and, I believe, in a bicameral way through Senator Baucus--are in this bill. They aim to restore that American dream. We do it in a very responsible way.
I yield the floor.
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IOWA FLOODS
Mr. GRASSLEY. I come to the floor today to give my colleagues an update on the devastating floods in Iowa, but you can also say a lot of the Midwest. The President is seeing the floods for the first time today. I appreciate Senator Harkin being there with him.
Senator Harkin and I are working closely together to make sure every base is covered in Iowa. We traveled throughout Iowa last weekend. We are meeting regularly to sort through everything that needs to happen. Today, we are covered, with him in Iowa with the President and me in the Senate to work for disaster recovery provisions in this very housing bill. The President has already named 55 of our 99 counties as Federal disaster areas.
More need to be named. I think he will see today the need to continue these declarations. During our tours through several communities last week, and hopefully again this weekend, we were pleased to see a great deal of coordination between FEMA, SBA, and our local officials. It sounded as though they were all talking with one voice, which is comforting to Iowans looking for guidance and support and, particularly, it looks a lot different than during Katrina, when it seemed like that was not particularly the case.
Today, many people are starting to get back in their homes and businesses. North of Iowa City, receding waters are bringing further heartache as residents salvage what they can and then throw away what was destroyed by the floodwaters. Those are the lucky ones. There are many who are determining whether they can salvage the house let alone what is inside.
Small communities downriver, such as Oakville and Columbus Junction, are completely submerged. Farms lost everything, including equipment, crops, livestock. The cities of Burlington and Keokuk are holding their breath to get through without devastation such as we have seen in Iowa City and Cedar Rapids.
Despite all this, Iowans continue to show their resiliency and heart. I was on C-SPAN's call-in program called ``Washington Journal'' earlier this week. People from all over the country called to say how proud they were of the way people in the Midwest, and particularly they were referring to Iowans, were pulling together and working to get through this disaster.
Of course, Senator Harkin and I could not agree more. Volunteers continue to be at the forefront of our efforts. Local churches have made heroic efforts. The Salvation Army and Red Cross have been in Iowa since the beginning. I cannot say enough about the local officials, including law enforcement, fire departments, and the Iowa National Guard.
I would like to extend my thank-yous to all my colleagues who have come forth showing their support. I think I can speak for both Senator Harkin and myself in saying we have had people in private coming up to us on the Senate floor. Having that happen is very gratifying.
Many of you have had similar events occurring in your own States and understand the pain we feel once again in Iowa. Our constituents are going to need the Federal Government's help. Senator Harkin and I have been meeting often and have also put together a coalition of Midwest Senators whose States were also hit.
I thank all my colleagues for giving our constituents the help they need as we continue down this road.
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