Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I would like to address the underlying Ensign amendment. I think most Members of this body believe very strongly we need to be much more self-sufficient in the production of energy. We are way too reliant on OPEC. We have made several attempts in this Congress in the last several months to try to pass tax incentive provisions to accomplish that objective. They have not been successful, for various reasons. Some because they are paid for, and people don't like to pay for this, and others because it was not paid for. For example, last February we passed an energy tax incentive package very similar to the Ensign package, which was not paid for, and that did not survive. So we are in a difficult position. I agree with the impetus of Senator Cantwell and Senator Ensign, but we also know the other body is probably not as friendly toward passing this because it is not paid for--not as friendly as this body. We hope the President signs this package. I am not terribly sanguine that will happen, but nevertheless let's at least try to see if the other body will in fact adopt it. This is a housing bill; it is not an energy bill. We want to get a housing bill passed very quickly, and now that we have an energy provision in it, that is a bit problematic as to whether we are going to get the housing bill passed as it is, especially when the energy provisions are not paid for. The Finance Committee has other options to pass this package. All Senators on the committee know what we have been working on. I am committed to getting these tax incentives passed this year. They are so important, so vitally important, for reasons everyone has mentioned. And, in fact, I am even more worried about it than probably some other Senators. I am as worried as the Senator from Washington about getting this passed. So I am committed to finding a way. If this approach is not successful, I am committed to finding a way, to finding a successful approach so these energy provisions are in fact enacted into law this year.

Mr. BAUCUS. I will be happy to yield.

Mr. BAUCUS. Mr. President, frankly, I think this is a good discussion. There is merit for both, for those who want to amend the law so IRAs can be used to help people finance their homes, but I also think the Senator from Connecticut, the chairman of the Banking Committee, makes a very good point. We don't want to let the lenders off the hook either. From a tax perspective, we in the Finance Committee believe--I can speak for myself anyway--that the purpose of this amendment is close enough to the nature of the purpose of the IRAs and the savings vehicles in the first place to warrant an exception that will last for 2 years because, after all, a home is pretty close to retirement. People should be saving for retirement in these retirement programs. If saving their home means dipping into their retirement savings, then I think that would be appropriate, as to avoiding the 10-percent penalty. Also it is in effect for only 2 years, so from a tax perspective I think it is appropriate. However, I think the chairman of the banking committees makes an excellent point and I would join with the Senator to see if he can find some way to incentivize lenders to do what they should be doing, at least with respect to the principal on a lot of these mortgage loans.

Mr. BAUCUS. I think we should. I will devote my staff to that effort.

Mr. BAUCUS

Mr. BAUCUS. I deeply appreciate the Senator wanting to be part of the team. There is another number here called 60. And it is my judgment that with more working together on measures with others, the greater the likelihood we will get this passed. We all want it passed. Let us do it in the context and in a forum in which we can get it passed. I yield the floor, and I suggest the absence of a quorum.

Mr. BAUCUS. We are taking 10-year numbers here. That is all we are talking about is 10 years, $15 billion. Second, this is not targeted to people who need it the most. Who needs it the most are those people whose homes are declining in value, not those homes that are increasing in value.

Mr. BAUCUS. Mr. President, on my remaining time, the cost is $15 billion over 10 years.

Mr. BAUCUS. Mr. President, this amendment essentially indexes the capital gains exclusion for the sale of a home. The problem is that homes are decreasing in value, not that they are increasing, and most people who are trying to sell their homes have a much lower market value for their house. Therefore, this is not a necessary provision for them. This amendment would apply to others who are not subprime candidates who are in good shape and have nothing to do with the subprime issue, and I don't think we want to index for them at this point. It is $50 billion that is the cost. It is unpaid for. This swallows up the housing bill. This is not the proper time, and that is why the point of order should stand because it violates the budget.

Mr. BAUCUS. Through the Chair, I will be glad to.

Mr. BAUCUS. Mr. President, all of us are concerned about ways to protect and to make our country more self-sufficient in the production of energy. We have made many attempts on this floor, in fact a major bill was voted on last year and was actually one vote shy of the necessary 60 votes. Many of us are working here, including the Senator from Nevada, as well as the Senator from Washington, Senator Cantwell, to find a way to bring up a significant energy bill later this year. There are various candidate bills for that. One is something called the extenders, and I think that is one of several ways where we can get this done. Extenders is going to pass. That is not an idle bill. It is going to pass. The amendment offered by Senator Ensign is unpaid for, and, to be honest, I frankly think the other body--some of them are called Blue Dogs--is not going to put up with it. We have to pay for an energy bill, and we are working on the offsets so we can get it paid for and so we can get it enacted into law. So I think, at this point, it would be a mistake to bring up this version because it would not survive a point of order challenge, and I urge the Senator from Nevada to work with the Finance Committee, work with others together, in a concerted way, to get something passed rather than going solo and trying on his own to push something that is not part of a team but, rather, as an individual. Because individual efforts are not going to be as successful as team efforts, and so I urge the Senator to be a part of the team so we can get this thing passed.

Mr. BAUCUS. Thank you very much.

Mr. BAUCUS. Madam President, I believe the Voinovich amendment is the pending amendment. I have spoken to that amendment and at this point cannot agree to it. It costs about $3 billion over 10 years. I have spoken to the sponsors and asked them to rewrite that amendment and talk to the Joint Committee on Taxation to get the score down to about $1 billion, and they are working on that right now. I very much hope they can get that amendment down to a billion because then it would be in a much more acceptable form. But right now, the size and scope of it is just too large. And I think it is appropriate, when we consider these tax amendments, to be somewhat prudent when we consider them and not go overboard. I do believe the current scope of the Voinovich amendment is too large, and they are very agreeable and are working with Joint Tax in amending the language to get it down to about $1 billion over 10 years.

Mr. BAUCUS. Yes.

Mr. BAUCUS. It is not on there? OK, good. I am okay as long as that amendment is not on there.

Mr. BAUCUS. It is the Ensign amendment. Take that off the list.

Mr. BAUCUS. I object, Madam President. There is one in there I don't want on that list, so I object.

Mr. BAUCUS. I want to ask the chairman of the Banking Committee to read those amendments off one more time.

Mr. BAUCUS. Reserving the right to object.

Mr. BAUCUS. I object.

Mr. BAUCUS. Mr. President, I will take 30 seconds out of my time. This is not a proper amendment--

Mr. BAUCUS. Mr. President, I raise a point of order that the pending amendment violates section 401 of Senate Concurrent Resolution 21 of the concurrent resolution for the budget for fiscal year 2008.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, if I might respond to the Senator from Georgia, I certainly appreciate those remarks. He is to be complimented for bringing the idea forward to me personally and to others. It is a major contribution to the solution we are providing here. We did have to tailor it down a little bit within the confines of the package. I thank the Senator from Georgia for being agreeable and for working with us to find a way to make this work.

Mr. BAUCUS. Mr. President, Charles Dickens wrote: Home is a name, a word, it is a strong one; stronger than a magician ever spoke, or a spirit ever answered to, in the strongest conjuration. Simply put, we are here today to help families keep their homes. We are here today to move a package of tax provisions that will help those families to keep their homes. Our package does so with tax relief for homeowners, for home buyers, and for home builders. We are offering this Finance Committee tax package as part of the pending consensus amendment assembled by the two leaders and by Senators Dodd and Shelby. Today, many American families find their home is threatened. A weak housing market has spread weakness throughout the larger economy. More than 5 million households now owe more than their house is worth. That is about 1 out of every 10 home mortgages. As prices fall, that number is expected to grow. Our tax package seeks to stabilize the housing market by providing temporary, targeted, and timely tax relief to the housing market. We have developed a consensus package that is limited to four provisions and these provisions focus solely on our ailing housing sector. The Finance Committee passed the first two provisions early this year as part of the economic stimulus package. First, our package increases the number of mortgage revenue bonds. Mortgage revenue bonds are tax-exempt bonds issued by State and local housing finance agencies. With the proceeds, these agencies can extend mortgages to home buyers at interest rates below the market rate. This will help. It will help homeowners avoid foreclosure and will increase first-time home purchases. The subprime and affordable mortgage markets have virtually collapsed. As a result, demand for mortgages financed by housing finance agencies is increasing. State housing agencies can respond immediately to the growing risks of foreclosure. These agencies can issue more mortgage revenue bonds. That can provide States the option to refinance subprime mortgages, and additional mortgage revenue bonds can help clear out the glut of existing homes on the market through first-time home purchases. Our proposal includes a second provision that the Finance Committee passed earlier this year. That is extending the carryback period for net operating losses, otherwise known as NOLs, from 2 years to 4 years. Generally, cyclical businesses have profitable years followed by loss years. During a loss period, a company will carry back the net operating losses from the loss years to their prior profitable years. They will file a quick refund claim and that quick refund claim will act as a cash infusion that will allow the company to survive a loss period. The housing industry in particular will greatly benefit from an increased NOL carryback period. The expanded period will allow builders to avoid selling land and houses at distressed prices, and it will provide less costly financing. An increased NOL carryback period will improve business conditions for the eventual return of the housing market, and the expanded period would give the housing industry cash to meet payroll, which would certainly limit additional job losses. Third, our proposal provides broad-based tax relief for low-income individuals and those who have already paid off their mortgages. Under our proposal, homeowners would be allowed to deduct local real estate property taxes from their Federal tax return, even if they don't itemize. According to the Joint Committee on Taxation, more than 28 million taxpayers pay property taxes but don't itemize. Our proposal would provide these 28 million taxpayers a deduction for the amount of their property taxes up to $500 for individuals and $1,000 for married filers. Most often, nonitemizers are low or middle-income people. Our proposal will also benefit those who are not likely to itemize because they have already paid off their mortgages. Senior citizens clearly would benefit. The Congressional Research Service estimates that nearly 130,000 property taxpayers could benefit in my home State of Montana alone. Fourth, our package provides a home ownership tax credit for the purchase of homes subject to foreclosure. Behind each foreclosed property is a family kicked to the curb, and the suffering does not end there. Foreclosed and vacant homes are a blight on the neighborhood. They drag down home prices. They are targets for vandalism and burglaries. Congress should encourage people to purchase those properties. That will help to stabilize home prices and get the housing industry back on track. Our proposal provides a one-time credit for taxpayers of $7,000. The credit will be claimed over 2 years and the home purchase would have to be made in the following 12 months. The short-term nature of this credit is critical to providing immediate stimulus. It also ensures that we do not oversubsidize the housing industry or exacerbate the current oversupply of residential homes. This focused package of four proposals will go far. It will go far to address the housing downturn and economic weakness in our country. I am proud we have all pulled together on this with Senator Grassley and others, and I hope the Senate can pass it into law expeditiously. A lot of irresponsible actions led to the housing crisis, but now a lot of responsible homeowners, home buyers and home builders are caught up in it. Tax relief and mortgage help to folks who played by the rules in the housing market is the right thing for Congress to do. The tax provisions in this package will keep property values up, keep folks in their homes, and keep businesses afloat, and those are all keys to handling the housing crisis. In sum, this is an effort to provide tax relief to homeowners, home buyers, and home builders. It is an attempt to help families keep their homes. It is an effort to preserve an important word stronger than any magician ever spoke or any spirit ever answered to--the word called ``home.'' I urge my colleagues to support the package. I yield the floor.

Mr. BAUCUS. Mr. President, I agree with the Senator from Pennsylvania. The last 10, 15 minutes has been one of the more edifying, constructive, and helpful explanations on various approaches. He made the statement that perhaps there should be more of that on the Senate floor, a point with which I strongly agree. I thank both Senators for that dialog.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent that the following fellows and interns on the staff of the Finance Committee be allowed floor privileges during consideration of the Foreclosure Prevention Act: Ben Miller, Blake Thompson, Bridget Mallon, Damian Kudelka, Emily Schwartz, Ezana Teferra, Kayleigh Brown, Mary Baker, Tom Louthan, and Tyler Gamble.