Thursday, June 24, 2010

Update: Unemployment Benefits, Housing Tax Credit

by Calculated Risk on 6/24/2010 07:32:00 PM

From Lori Montgomery at the WaPo: Senate again rejects emergency spending package

The Senate on Thursday rejected a package of tax cuts, state aid and emergency jobless benefits ... [try again] after the July 4 recess. By then, more than 2 million people will have seen their unemployment benefits cut off, according to the U.S. Department of Labor.
What this means is that anyone receiving extended unemployment benefits (there are several tiers) will not be eligible for the next tier when their unemployment benefits expire.

This bill also contains the extension of the closing date for the homebuyer tax credit. As of right now, homebuyers must close by June 30th to receive the tax credit.

But of course the housing industry wants even more. From Zach Fox at SNL Financial: Analysts: Record low new-home sales could lead to another tax credit
Even though he is not in favor of another tax credit, [Michael Widner, an analyst with Stifel Nicolaus & Co.] said May's exceptionally low number means plenty of industry insiders will push for one.

"On the one hand, I know that the phones are ringing off the hook in D.C. right now for people clamoring for a new tax credit," Widner said. "So the shock value of an all-time low is going to be a lot of people saying: 'Oh my God, we gotta do more to stimulate housing.' ... And on the other hand, you're going to get people, who frankly I side with more, saying: 'You know, look, obviously the tax credit did nothing but pull demand forward, and in the wake of the tax credit you see the void left behind.'"
Hopefully there will not be another housing tax credit. And hopefully the change in eligibility date for extended unemployment benefits will be approved.