A bipartisan economic stimulus package unveiled by House leaders yesterday did not include any of the bond-related proposals that municipal market groups had urged Congress to include in the measure.
However, House Speaker Nancy Pelosi, D-Calif., said that she would spearhead other stimulus efforts, which could be a vehicle for the bond-proposals, if the package does not provide the boost that is intended.
“Should our economy continue to worsen, we would not hesitate to advance additional legislation … to respond to the economic pressures affecting the American people,” Pelosi said at a press conference announcing the package.
Her comments came as leading members of the Senate stressed the need for another economic package, focused on the long-term.
At a separate press conference yesterday, Sen. Charles E. Schumer, D-N.Y., voiced support for a proposal from the Securities Industry and Financial Markets Association to temporarily allow state and local governments to issue tax-exempt mortgage revenue bonds to refinance existing subprime loans but said it is better suited for a follow up stimulus package.
“It is a good one,” Schumer said. “But if you are looking, as I think we are, at two packages — one to get things done quickly and one [with a longer-term horizon] — that [proposal] would probably fall into the second” package.
Currently, MRBs can only be used to aid first-time home buyers. SIFMA has been pushing the MRB proposal as well as an increase in the tax-exempt private-activity bond volume cap for MRBs, so that states will have additional capacity to meet their housing finance needs.
The group also suggested temporarily exempting housing bonds from the alternative minimum tax, which it said would make the bonds more attractive to investors and reduce the cost of MRB-financed mortgages.
The economic stimulus bill is expected to be approved by the House next week, passed by the Senate the week of Feb. 4, and sent to the President Bush by Feb. 18, Senate Majority Leader Harry Reid, D-Nev., said yesterday. Reid and Schumer said other items could be included in the bill by the Senate, such as funding for infrastructure, funding for the community development block grants, and an extension of unemployment benefits.
Their comments came as Senate Finance Committee chairman Max Baucus, D-Mont., said yesterday that he plans to draft his own stimulus plan, which could slow the legislative process because the House would have to approve any changes to a package it passes and sends to the Senate.
The package unveiled yesterday by House leaders, would also increase to $625,000 from 417,000 Fannie Mae’s and Freddie Mac’s loan limits for one year. The bill would provide cash rebates of up to $600 for individuals and $1,200 for a married couple, plus an additional $300 per child to about 117 million Americans, at an expected cost of about $100 billion. In addition, the bill would allow businesses to write off 50% of their investments in new plants and capital equipment and double the amount small businesses can write off for similar purchases.