A $20 billion-plus package of homebuyer and business tax breaks was advanced in the Senate Monday, together with a precedent-setting expansion of unemployment benefits to help carry the jobless through the holiday season. Senate eyes jobless aid, home credit

A $20 billion-plus package of homebuyer and business tax breaks was advanced in the Senate Monday, together with a precedent-setting expansion of unemployment benefits to help carry the jobless through the holiday season.

Ending weeks of delay, all but two Republicans joined Democrats on an 85-2 roll call to cut off debate. Procedural obstacles remain, but passage this week appears all but certain. The House is expected to take up the measure next and send it on to President Barack Obama for his signature.


Concessions to real estate and business interests helped deliver the package, a remarkable political amalgam given the pain so associated with the long-term unemployed.

The homebuyer credit, which remains controversial, will apply to houses worth as much as $800,000; and businesses of all sizes stand to benefit from a tax break first afforded this year just to those with gross receipts of $15 million or less.

But the biggest emotional driver for Democrats is the prospect of hundreds of thousands of workers exhausting their benefits before Thanksgiving and Christmas without some extension.

The bill seeks to fill this gap by adding up to 20 more weeks in aid — establishing a modern record of 99 weeks when state and federal benefits are counted together. With new unemployment numbers due out Friday, the measure testifies to the enduring joblessness problem even as the economy shows signs of new strength and recovery.

“We’re not out of the woods yet,” said Senate Finance Committee Chairman Max Baucus (D-Mont.). “There are about 15 million people in our country unemployed, who are looking for about 3 million jobs. That’s a ratio of about 1 out of 5. That’s just unconscionable in a country like ours.”

“It’s a much harsher job market for the longer-term unemployed,” said Chad Stone, chief economist for the Center on Budget and Policy Priorities. And September’s Labor Department report shows that 35.6 percent of the unemployed have been out of work for more than 27 weeks, he said, the highest level recorded since the data were first collected in 1948.

Unemployed workers are now typically helped by three sets of jobless benefits: 26 weeks at the state level, 20 more in federal extended benefits and then 33 more weeks in the form of emergency federal benefits — first initiated in the summer of 2008 and then greatly expanded in Obama’s economic recovery program earlier this year.

Even this superstructure of 79 weeks has proved inadequate, given the depth and nature of this economic downturn. Labor interests estimate that beginning in September, a steady stream of about 7,000 workers began exhausting their benefits each day, and the House on Sept. 22 easily approved a bill to provide some extension.

The Senate package now seeks to build on this, promising 14 more weeks to all workers who have exhausted their benefits. And those in states with a three-month unemployment rate averaging 8.5 percent would get an additional six weeks, or 20 altogether.

With the unemployment rate nationally at 9.8 percent, that is not a small universe. And it is estimated that 27 states plus the District of Columbia and Puerto Rico would now meet the 8.5 percent trigger.

Nonetheless, the bill became a political bone for Republicans seeking to add contentious amendments related to immigration, for example, or renewing attacks on Obama’s stimulus program. And this gave added leverage to those seeking the tax breaks that were finally included.

The homebuyer tax credit, due to expire at the end of this month, would be extended through April 30 of next year, with provisions added both to address complaints of fraud and to expand the universe of purchasers who qualify for the benefit.

The current $8,000 credit would still be limited to first-time homebuyers. But a $6,500 credit would now be available to so-called move-up homeowners, who have lived in their current residence for five of the prior eight years and wish to sell and buy a new home.

To expand the universe of qualified buyers, the credits now would be available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers.

But critics argue that the whole scheme is a sop to the real estate industry and another government-backed financial inducement for couples to jump into homeownership too fast.

“We’re kidding ourselves if we think we can prevent more fraud, more taxpayer losses,” said Sen. Kit Bond (R-Mo.). “The most effective means of preventing fraud is simply [to] not extend the credit.”

The major business tax break added to the bill is targeted to cash-strapped firms with net operating losses this year or in 2008 with the economic downturn.

Ordinarily these companies can carry back these losses for two years to qualify for a tax refund, and the bill would make this process potentially richer by extending the carry-back to five years for either 2008 or 2009.

A similar provision, applying just to 2008, was included in the president’s economic recovery bill last winter but limited to smaller companies to keep down the cost to the Treasury. The tax break will now apply to losses in either 2008 or 2009, and the income cap will come off, bringing the total cost to about $10.4 billion over 10 years.

Both tax breaks — the homebuyer credit and the change to net operating loss — will be offset by tax changes affecting foreign tax credits, chiefly important to large multinational corporations, according to the Senate Finance Committee.