After the President announced his budget plan, NAHB Chairman Joe Robson issued a media statement highly critical of the Administration's proposal to reduce the value of the mortgage interest and real estate tax deductions for home buyers and home owners in order to pay for an expanded health care initiative. Robson's comments were as follows:

“With the housing market still reeling from its worst downturn since the Great Depression, this is not the time to talk about raising taxes on home buyers and home owners. This proposal will increase the cost of housing for many middle-class families, particularly in high-cost areas such as California and the Northeast, which will only further undercut the housing market, exert more downward pressure on home values and work against the President’s efforts to stabilize housing and turn this economy around.
 
“The proposed budget would also tax a ‘carried interest’ as ordinary income, which could significantly impact the multifamily and commercial real estate sectors at a time when they are already experiencing a severe downswing. At this critical point in the recession, we should be doing everything we can to stimulate demand in housing and avoid proposals that would reduce housing affordability and further destabilize prices.
 
“The notion of ‘robbing Peter to pay Paul’ just won’t work. Not when the stakes are so high with our economy. This week alone, existing home sales dropped another 5.3 percent and new homes sales plunged 10.2 percent. The month supply of unsold homes is at an all-time high.  Financing health care reforms by chipping away at the mortgage interest and real estate tax deductions is certainly not the answer. This will only hurt the ailing housing market and U.S. economy."

Obama is expected to send Congress a complete budget plan in April and Congress is not anticipated to approve the fiscal year 2010 budget until later in the year. Given the size, cost, complexities and major policy overhauls that this blueprint entails, the budget battle in the weeks and months ahead is likely to be contentious as lawmakers on both sides of the aisle debate its merits on an array fronts, from social spending, to energy policy to taxes.

In  a press release commenting on the President's budget, Senate Finance Committee Chairman Max Baucus (D-Mont.) praised the plan but expressed similar concerns raised by NAHB.  "Some of the reforms and offsets contained or referenced in the budget, such as the limitation on itemized deductions, raise concerns and will require more study as we determine the best policies for getting America back on he track," he said. 

Below is a snapshot of tax and spending items of interest to the builder community that is included in Obama's proposed budget:

Taxes

• Limits the mortgage interest deduction, real estate tax deductions and all other itemized deductions for couples making over $250,000 and single taxpayers earning more than $200,000
  • A tax increase for home owners, home buyers, as well as small business taxpayers who report income on their individual income tax return
  • Significant impact in high-cost areas
    
• Taxes carried interest as ordinary income
• Increases the capital gains tax to 20% for couples earning more than $250,000
• Provides an expansion of net operating loss (NOL) carry back for all businesses (stimulus legislation limited this to small businesses)

Appropriations

•  Increases funding for green jobs
• Adds more weatherization funding
• Provides more funding for OSHA enforcement
• Mandates employers to re-enroll employees in retirement accounts
• Creates more lobbying restrictions and databases
• Eliminates a HUD low income housing program
• Provides full CDBG and Section 8 funding 
• Funds the Affordable Housing Trust Fund (Fannie Mae and Freddie Mac money is now gone so this becomes a direct appropriation)
• Creates a HUD energy innovation fund to create an “energy efficient housing market”  

NAHB will remain deeply engaged as the budget process moves forward and fight to strip out any provisions that will harm housing and promote elements that will help small businesses and the housing sector. For more information on the tax components in the budget, contact Greg Brown at 1-800-368-5242, x8421. For information on specific housing and spending programs, contact Jenna Hamilton at x8407.

The Secret Ballot Protection Act seeks to act as a counterbalance to the Employee Free Choice Act (EFCA), the confusingly-named legislation that would eliminate the requirement that unions and the National Labor Relations Board (NLRB) allow for a secret ballot vote among workers when organizing a workplace to join a union.  In the last Congress, EFCA passed the House but was unable to clear the Senate, and then-President George Bush indicated that he would have vetoed the measure if it reached his desk. 

Labor unions continue to push for passage of EFCA as their number one legislative priority for the 111th Congress, and lawmakers who support that measure are presently strategizing over how best to proceed.  It is widely believed that the EFCA effort will begin in the Senate this time around, with many House lawmakers uninterested in having to vote on the controversial measure until the Senate can show that it can be passed.  NAHB passed policy in the spring of 2008 opposing EFCA, and any effort to eliminate the secret ballot requirement on labor union organizers. For more information, contact Jenna Hamilton at 1-800-368-5242, x8407. [return to top]

Witnesses from the National Association of State Energy Offices (NASEO), Architecture 2030, and the American Council for an Energy Efficient Economy (ACEEE) all agreed that the federal government must enact national code requirements that exceed existing I-Codes because the adoption of individual codes on a state by state basis was not working effectively.  None of the building industry trade groups was invited to testify at the hearing, but many, including NAHB, are weighing directly with committee members on the issue of codes in advance of upcoming energy legislation that will likely attempt to mandate aggressive nationalized codes for residential and commercial buildings.  Testimony from the hearing witnesses is available by clicking here. For more information, contact Elizabeth Odina at 1-800-368-5242, x8570. [return to top]

NAHB is working closely with the National Endangered Species Act Reform Coalition to defeat this rider in the Senate.  For more information, contact J.P. Delmore at 1-800-368-5242, x8412. [return to top]