Jobless aid stalls in Senate; home buyers get more time

The Senate failed once again late Wednesday to advance a plan to restore jobless benefits for people out of work more than six months, leaving millions of unemployed workers in limbo until after the July 4 recess.

The measure fell one vote shy of the 60 needed to end a Republican filibuster. Sen. George V. Voinovich (R-Ohio) said he was prepared to provide that vote, but that Democrats had rejected his request to pay for at least half of the $34 billion measure with unspent funds from last year's stimulus package.

"Democrats are more interested in having this issue to demagogue for political gamesmanship than they are in simply passing the benefits extension," Voinovich, who is retiring, said in a statement. "I came to the table with a fair compromise and the ball is in their court."

Democrats countered that the 9.7 percent jobless rate constitutes a continuing emergency that, under congressional budget rules, has traditionally been addressed through deficit spending.

"For those who question whether this is an emergency situation, they should talk to the Nevadans who I hear from every day who rely on this assistance to put food on the table and pay the bills while they look for work," Senate Majority Leader Harry M. Reid (D-Nev.) said at a news conference with Labor Secretary Hilda L. Solis.

That argument won over at least two Republicans: Sens. Olympia J. Snowe and Susan Collins of Maine voted for the stripped-down measure, which would have restored jobless benefits that expired June 2 and extended the deadline for home buyers to claim a tax credit aimed at reviving the housing market until Sept. 30. After the overall bill failed, the Senate passed a separate measure that sent the tax credit to President Obama for his signature.

At Snowe's urging, Democrats had jettisoned numerous other provisions from the jobless bill, including $16 billion for cash-strapped state governments, $1 billion for summer jobs and $32 billion in special-interest tax breaks that expired earlier this year.

But other Republicans -- as well as Sen. Ben Nelson (D-Neb.) -- continued to insist that at least a portion of the jobless benefits be paid for, arguing that the nation can no longer afford to add to record budget deficits. When it became clear that the vote would fail, Reid switched sides for strategic reasons, making the final vote 58 to 38.

House leaders were planning to take up the jobless bill Thursday and said they expect it to pass. But its failure in the Senate ensures that more than 2 million people will have their checks cut off before Congress returns to Washington after a week-long break. The Labor Department estimates that more than 1.2 million people already have been affected.

States typically provide unemployment benefits for up to 26 weeks. Congress triggered emergency benefits in 2008 and expanded them in last year's stimulus package. On June 2, the federal programs was providing more than 5 million people with up to 99 weeks of assistance.  Via Washington Post






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Solar Panels, Loans and a Turf War

The Obama administration is devoting $150 million in stimulus money for programs that help homeowners install solar panels and other energy improvements, which they pay for over time on their property tax bills.

At the same time, the two government-chartered agencies that buy and resell most home mortgages are threatening to derail the effort by warning that they might not accept loans for homes that take advantage of the special financing.

The mixed messages have alarmed state officials and prompted many local governments to freeze their programs, which have been hailed as an innovative way to help homeowners afford the retrofitting of a house with solar panels, which can cost $30,000 or more before incentives.

“The thing that is maddening is that this is having a real-life impact with companies laying off people and homeowners in limbo as all these projects are stalled,” said Clifford Rechtschaffen, a special assistant attorney general in California.

Under the financing programs, a local government borrows money through bonds or other means, and then uses it to make loans to homeowners to cover the upfront costs of solar installations or other energy improvements. Each owner repays the loan over 20 years through a special property tax assessment, which stays with the home even if it is sold.

The technique, known as Property Assessed Clean Energy, or PACE, was pioneered by Berkeley, Calif., in 2008, and 22 states have authorized such programs, which are intended to make it easier and cheaper for homeowners to invest in energy efficiency. So far, only a few thousand people have used them.

But the Energy Department wants to promote the programs — and give an economic boost to companies that install energy systems — through the $150 million in stimulus funds, which are intended to help communities cover setup and administrative costs.

Fannie Mae and Freddie Mac, the government entities that guarantee more than half of the residential mortgages in the United States, have different priorities. They are worried that taxpayers will end up as losers if a homeowner defaults on a mortgage on a home that uses such creative financing. Typically, property taxes must be paid first from any proceeds on a foreclosed home.

In letters sent to mortgage lenders on May 5, Fannie Mae and Freddie Mac stated that energy-efficiency liens could not take priority over a mortgage. “The purpose of this industry letter is to remind seller/servicers that an energy-related lien may not be senior to any mortgage delivered to Freddie Mac,” wrote Patricia J. McClung, a Freddie Mac executive.

However, the agencies did not offer guidance to mortgage lenders on how to handle properties that carry the energy liens. Backers of the programs fear that mortgage lenders, who depend on Fannie and Freddie to buy their home loans, will now start demanding that the entire lien be paid off before issuing a new loan.

That is what happened to Deke DeKay of Healdsburg, Calif., when he sold a house in nearby Geyserville in May. Mr. DeKay, who had purchased the foreclosed home as an investment, put in new insulation and heating and cooling systems, financed by $11,000 from Sonoma County’s program.

“We thought this would be an interesting way of upgrading the home’s energy efficiency without adding to the purchase price,” Mr. DeKay said. “Then right before the close of escrow, the bank discovered this stuff Fannie Mae and Freddie Mae put out and refused to approve the loan without the assessment being paid off first.”

Now Mr. DeKay is worried about his own home, which carries a $25,500 lien for a five-kilowatt solar array installed last year. “If we ever want to refinance the house, it will be impossible for us to do that,” he said.

State and local officials, including Gov. Arnold Schwarzenegger of California and Mayor Michael R. Bloomberg of New York, and some members of Congress have jumped into the fray, pressing the Federal Housing Finance Agency, which oversees Fannie and Freddie, for clarification of its position on the financing programs.

“The letters have had a devastating impact on PACE programs in California, placing at risk hundreds of millions of dollars of federal stimulus funding, hundreds of millions of dollars of state, local and private funding, and impacting California’s efforts to promote green jobs and greenhouse gas emissions reductions,” Ken Alex, a senior assistant attorney general in California, wrote in a June 22 letter to the housing agency.   Read Full story in    NYTIMES








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Jobless Aid Bill Hits Deficit Wall In Senate

President Barack Obama's plea for more stimulus spending as insurance against a double-dip recession hit a roadblock in the Senate on Wednesday, the victim of election-year anxiety over huge federal deficits. A dozen Democrats joined Republicans on a key 52-45 test vote rejecting an Obama-endorsed, $140 billion package of unemployment benefits, aid to states, business and family tax breaks and Medicare payments for doctors because it would swell the federal debt by $80 billion.

The swing toward frugality runs counter to the advice of economists who support the bill's funding for additional jobless benefits and help to states to avoid layoffs of public service jobs. They fear that the economy could slip back into recession just as it's emerging from the biggest economic downturn since the Great Depression.
Federal Reserve Chairman Ben Bernanke warned last week that while lawmakers need to come up with a plan for tackling the nation's long-term deficit crisis, the U.S. recovery is still fragile. It's too early for large, immediate spending cuts, Bernanke said. "We've got to do more to build on the existing jobs momentum and that's what these targeted measures are about," said White House economist Jared Bernstein.
The Senate earlier passed another version with even bigger deficits. But that was before tea party-backed candidates running on anti-deficit, anti-big government platforms began knocking off more established politicians in spring primaries.
Despite the loss, Democratic leaders predicted serenely that a scaled-back version of the measure — extending unemployment benefits for the long-term jobless and providing $24 billion in aid to the states — could pass, possibly as early as later this week, after relatively minor revisions. "We need to change a few things," said Majority Leader Harry Reid, D-Nev.
Later Wednesday, Finance Committee Chairman Max Baucus, D-Mont., unveiled a new, slimmer version of the bill that he predicted would "provide a path forward."  But Republicans cautioned that the margin of Wednesday's vote was a bad sign for a bill that, even after     Read More





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