Weighing in at $16.7 billion, the homebuyer tax credit being pushed by Sens. Johnny Isakson (not pictured) and Chris Dodd (above) makes up the bulk of the roughly $20 billion total. Price tag for another 'stimulus': $20B

The Senate appears ready to drop about $20 billion for two pieces of economic stimulus that no one wants to label “stimulus,” in the form of additional jobless benefits for unemployed workers and an extended, expanded tax credit for homebuyers.

Weighing in at $16.7 billion, the homebuyer tax credit being pushed by Sens. Johnny Isakson (R-Ga.) and Chris Dodd (D-Conn.) makes up the bulk of that total. The Joint Committee on Taxation released that estimated price tag Tuesday.


Isakson and Dodd plan to offer their housing tax credit extension as an amendment to legislation extending jobless benefits. The jobless benefits – the second bit of stimulus the Senate is likely to approve – would cost about $2.4 billion according to a preliminary estimate by the Congressional Budget Office. The cost of the extended jobless benefits would be offset by extending the federal unemployment tax on employers through June 30, 2011.

Republicans want to amend the Democratic bill so it is paid for with stimulus funds and have objected to leadership's attempts to pass the jobless benefits bill by voice vote.

If the Isakson-Dodd amendment becomes law, taxpayers would have likely spent more than $30 billion on spurring home sales alone, since the original yearlong housing tax credit – limited to first-time buyers only – included in the $787 billion stimulus is estimated to cost about $15 billion by the time it expires at the end of the year.

That doesn’t seem to be fazing many senators.

“I haven’t had any objection yet,” Isakson said, ticking off a bipartisan list of expected supporters including Barbara Mikulski (D-Md.), Kent Conrad (D-N.D.) and Joe Lieberman (I-Conn.). He said he believes leadership will allow Dodd and him to offer the amendment when the unemployment bill comes to a vote.

Senate Majority Leader Harry Reid and Republican Sen. John Ensign, hailing from recession battered Nevada, both support extending the existing housing tax credit.

“Cost obviously is a concern on any issue but if you take the $85 billion to AIG, $700 billion in TARP, $787 billion stimulus – and you compare all those to what happened $16 billion did in the first-time homebuyer tax credit, it’s a pretty good return on the investment,” said Isakson.

Not everyone agrees with that assessment. Some housing experts criticize the housing tax credit as poorly targeted and not much bang-for-the-buck. It’s widely estimated that the tax credit spurred 350,000 home sales that would not otherwise have happened. That means the government spent $43,000 per new home sold, according to Brookings Institution economist Ted Gayer.

The Isakson-Dodd amendment would expand the tax credit to all homebuyers, as well as double the existing income caps so that couples making up to $300,000 and individuals making up to $150,000 would qualify.

Isakson, a former real estate agent, believes this expansion will help the still-struggling housing market get on its feet.

“You can’t do this forever, but I think if you do open [the credit] up so it appeals to the move-up market as well, you give the housing market the chance to begin what everybody knows has to happen and that’s a recovery,” Isakson said.