The U.S. economy will not recover until the housing market revives, U.S. Sen. Johnny Isakson said Monday as he renewed his call for a $15,000 homebuyer tax credit to be included in the economic stimulus package now being considered by the Senate.
A first-term Georgia Republican senator from Cobb County, Isakson also reiterated his call for a "forensic investigation" of what went wrong with the economy.
"It may not make that bill perfect," Isakson told the Atlanta Rotary Club of his proposed housing credit. "But it is the single best thing we can do to begin the comeback."
Isakson wants a tax break for any family who buys and holds a home for at least three years 3 years. Housing prices across the nation have fallen about 25 percent in the last two years and are cited by many economists as the foundation of many of the current financial woes.
"It will work, and I'm convinced it will be the beginning of putting a bottom under the housing market," he said.
The senator's idea has gotten some buzz from both Republicans and Democrats in the Senate, which this week began considering its own version of a multi-billion-dollar package to jump-start the economy. The senator said he was sitting in church Sunday when he got an email that a prominent Senate Democrat was touting his idea on television.
The tax credit "is something that we look favorably upon," Sen. Charles Schumer, (D-N.Y.), said over the weekend.
U.S. Sen. Saxby Chambliss (R-Ga.) has gone on the record backing Isakson's idea. Chambliss wants the Senate version of the stimulus bill to contain less direct spending and more tax credits for small business.
Senate Minority Leader Mich McConnell, (R-Ky.), meanwhile, announced he wants to introduce a provision that would make government-backed 4 percent fixed-rate mortgages to any credit-worthy borrower. The average American family would see its mortgage payment drop by about $466 a month, according to McConnell.
The U.S. House of Representatives last week passed a $819 billion stimulus package, but the Senate has balked at that proposal. Isakson and other upper chamber Republicans, who are in the minority, hope to hone a compromise in the next few weeks that includes more tax credits than the House bill.
"I think there will be some great theater this week," Isakson said of the stimulus debate. "I think we have a chance to do something meaningful."
The former head of Northside Realty, Isakson compared the current housing crisis to that of 1974. That year, he said, there was a three-year supply of housing on the market. There is now an 11-month supply, he said.
Three decades back, then-President Gerald Ford pushed through Congress a tax credit for anyone who bought a home in 1975, Isakson said. That move, he said, reduced the housing supply to 10 months â€" housing rebounded and the economy recovered.
The first-term senator described the economy as having "deep problems" and cautioned that "no single dose of medicine will cure it."
However, if people begin buying houses again, the recovery can begin to begin, he said.
"Housing led us into this problem, and it will lead us out," Isakson said. "If we don't fix it, the bottom will continue to lower."
Kurt Cannon, president of the Home Builders Association of Georgia, said he has been meeting with Isakson for months about ways to help the housing industry.
"We don't want a bailout; we don't want any money to buy a jet or go on vacation," said Cannon, whose organization also is pushing for a
state tax credit for home buyers. "This would go directly to the consumer to incentivize them to go out and do something good and invest in their future."
A recent study by Cannon's group found that the housing slump cost Georgia 196,000 construction-related jobs, $11 billion in wages and
$2.8 billion in taxes and fees between the end of 2006 and October 2008 alone.
Some housing industry officials have made it clear they would welcome any help from the federal government.
"Real estate has always led this nation out of economic downturns," National Association of Realtors President Charles McMillan said in a statement. "A renewed, revitalized and robust housing market is essential to generating commerce and helping families build wealth and stability."