Senate Democrats Block Estate Tax “Trifecta” Bill
By a 56-42 vote, the Senate last week defeated a motion to proceed to vote on H.R. 5970, the Estate Tax and Extension of Tax Relief Act of 2006. Senate Democrats led the way in blocking consideration of the measure, which needed 60 votes to move forward. Dubbed the “trifecta” bill, the legislation would have provided permanent estate tax relief, increased the minimum wage and extended numerous expiring business tax breaks.

Although the bill was approved by the House on July 28, Senate Democrats objected to linking a vote on boosting the minimum wage with estate tax relief. Senators from both parties expressed an interest in moving a set of tax break extensions separately after returning from their August recess, but the fate of a tax cut package remains unclear.

Prior to the Senate vote, NAHB sent a letter to Senate Majority Leader Bill Frist (R-TN) in support of the bill and also delivered a follow-up letter to every Senator stating the association would consider invoking cloture on the motion to proceed with the bill as a “key vote.” In a procedural move, Frist changed his vote to “no” so that he would retain his right under the rules of the Senate to bring the bill up again in the future. Senate leadership has indicated it would like to bring the legislation back to the Senate floor in the fall, although it remains uncertain if this will occur due to the limited number of the days the Senate will be in session prior to the fall election. To view the legislation, click here and enter the bill number in the center screen box. For more information, e-mail Greg Brown or call him at 800-368-5242, x8421.

Full Senate Vote on GSE Bill Remains Uncertain
During consideration of a credit-rating agency reform bill in the Senate Banking Committee last week, Senators Chuck Hagel (R-NE) and John Sununu (R-NH) drafted two amendments aimed at altering how credit-rating agencies deal with the housing government-sponsored enterprises (GSEs).  The amendments would have had the effect of forcing credit-rating agencies to not base their GSE ratings on any “implicit” guarantee of government support.  The amendments were ultimately withdrawn after Senator Paul Sarbanes (D-MD) raised concerns about having Congress dictate how rating agencies conduct their business. 

While the amendments were expected to be withdrawn, the markup once again gave GSE critics the opportunity to vocalize support for Senate debate on the committee-passed GSE reform bill S. 190.  While Senate Banking Committee Chairman Richard Shelby (R-AL) still maintains that there is time to pass comprehensive GSE reform legislation before the fall elections, several other Senators expressed skepticism because Shelby has yet to offer any specific compromise with Senate Democrats to bridge the partisan divide on this legislation.

In other GSE news, Freddie Mac agreed last week, at the request of the Office of Federal Housing Oversight (OFHEO), to voluntarily limit the growth of its $710 billion of mortgage holdings to no more than 2% a year.  The voluntary limit will expire once Freddie Mac resumes publishing regular quarterly financial reports.  This temporary limit comes less than two months after Fannie Mae agreed to cap its mortgage portfolio at about $727 billion.  While some have speculated that these voluntary portfolio limits could pave the way for a compromise on GSE reform legislation, others point out that this only strengthens the arguments that OFHEO already has the tools and strength necessary to properly regulate the housing GSEs.  NAHB will continue to monitor this debate throughout the August recess as staff prepare for the short legislative session prior to the November elections. For more information, e-mail Scott Meyer or call him at 800-368-5242, x8144. [return to top]

Senate Panel Holds Hearing on Tax Reform
The Senate Finance Committee last week held the first in a new series of hearings on tax reform.  Entitled Kick-Off for Tax Reform: Tackling the Tax Code, witnesses for the hearing included former Senators Connie Mack and John Breaux, co-chairs of the President’s Advisory Panel on Federal Tax Reform. In a related development Senators Max Baucus (D-MT) and  Bob Menendez (D-NJ) introduced legislation allowing home owners who currently do not itemize on their federal tax returns to take an additional standard deduction for the state and local property taxes that they pay to support public education. Only two-thirds of property taxes paid by individuals are currently deducted on federal returns. Entitled the Nonitemizer Real Property Tax Deduction Act of 2006, H.R. 3738 would create an additional standard deduction of $500 for single filers and $1,000 on a jointly filed return, for state and local real property taxes paid or accrued. Non-itemizers would be able to claim the deduction on top of the standard deduction. The legislation was referred to the Senate Finance Committee and NAHB staff is monitoring its progress. To view the legislation, click here and type the bill number in the center screen box. For more information, e-mail Greg Brown or call him at 800-368-5242, x8421. [return to top]

Senate Panel Discusses Supreme Court Wetlands Cases
The Senate Subcommittee on Fisheries, Wildlife and Water last week held a hearing on interpreting the effect of the U.S. Supreme Court’s decision in Rapanos v. United States and Carabell v. U.S. Army Corps of Engineers on “waters of the United States.”  In each case, the Corps asserted jurisdiction over the petitioners’ properties because the wetlands in question are adjacent to ditches, which the Corps classifies as tributaries.  The Rapanos case concerns three separate Michigan properties, the Salzburg, Hines Road and Pine River sites.  All three sites contain wetlands that are next to ditches or some type of stream.  The Carabell property, also located in Michigan, contains a wetland that is separated from a man-made ditch by a berm.

The hearing broke down along predictable lines: the government witnesses committed to issuing interim guidance in the near-term as a result of the decision, but stopped short of committing to a full-blown rulemaking; the legal experts split on the exact meaning of the decision; and the stakeholders were split over the need for a legislative or regulatory fix. NAHB also is submitting testimony for the record. 

Finally, NAHB has been meeting with key members of the Senate to urge them to sign a joint letter calling on the Bush Administration to initiate a rulemaking on wetlands jurisdiction. For more information, e-mail Jim Tobin or call him at 800-368-5242, x8258. [return to top]

Congress, Washington Update to Return in September
Both chambers of Congress have officially adjourned for their summer recess and lawmakers are not scheduled to return to Capitol Hill until September. Publication of NAHB’s Washington Update will also remain on hiatus until the Congress reconvenes in September. [return to top]