Update 2/12: The $15,000 provision has been replaced by an $8,000 first-time home buyer credit, according to the Wall Street Journal.

Holy schmoly… the Senate just voted and included a $15,000 tax break to homebuyers!

It was an addition that Senate Republicans wanted in order to leave “their mark” on the economic stimulus package President Obama has called the American Recovery and Reinvestment Plan. At an estimated cost of $19 billion, the $15,000 tax credit is very much like the $7,500 tax credit given to first time homebuyers. It will be a tax credit of 10% of the value of new or existing homes, up to a $15,000 limit and everyone would be eligible, not just first-time homebuyers (defined in the previous bill as someone who hadn’t owned a home in the last three years).

From a reader:

Check out the potential big changes to this credit…increased amount to $15,00, a proposed no repayment/recapture, plus a new 5% down payment requirement. Downside is it’s not really retroactive but meant for purchases after December 31st, 2008.

Original Rules:
IRS.gov

Proposed Amendment introduced today into the economic stimulus package (two pages of Congressional record when the amendment was introduced in the Senate, February 4th, 2009):
http://frwebgate.access.gpo.gov/cgi-bin/getpage.cgi?dbname=2009_record&page=S1493&position=all
http://frwebgate.access.gpo.gov/cgi-bin/getpage.cgi?dbname=2009_record&page=S1494&position=all

Absolutely stunning… you almost have to buy a house now.

The Committee on Appropriations released an executive summary on the details of the American Recovery & Reinvestment Plan, the formal name for President Obama’s stimulus package, and it’s thirteen pages long with a decent level of detail. First I’ll list the high level overview then point out some of the things that might affect you. If you’re curious about a stimulus check, it’s not in there.

(click here to continue reading…)

1/15: The Committee on Appropriations just released the an executive summery of the details of the American Recovery and Reinvestment Plan.

Obama offered some more details on the economic recovery plan he plans to put forward to Congress after the inauguration in his weekly radio address today, a program he called the American Recovery and Reinvestment Plan.

Some of the salient details were that he wanted to plan to create three million new jobs, up from 2.5 million, and to :

• double renewable energy production and make public buildings more energy efficient;
• rebuild crumbling roads, bridges and schools; computerize the health care system; modernize classrooms, labs and libraries;
• and provide tax breaks to American workers.

His advisers have estimated that the cost of the plan could be anywhere from $675 billion to $775 billion, while others expect it to be closer to $1 trillion. With how the government has been printing money lately, an extra $1 trillion, especially invested into programs that will help Americans stay employed and improve our infrastructure (rather than prop up banks and their epic failures), is better than the alternative. The question remains, will there be more pork stuffed in there or will this truly be a focused bill? We will have to see.

You can watch the address yourself (four minutes long):

Full transcript available here.

Fannie Mae announced today that it would allow thousands of tenants remain in foreclosed homes as long as they stayed current on their rent. About 4,000 renters signed new leases and were permitted to stay in their rentals even though the property’s owners had been foreclosed on. While it turns Fannie Mae into a landlord, something it’s probably ill-equipped to handle efficiently, it’s probably the first action they’ve done in a long time that has made people smile.

The reason they’re doing it is because it makes financial sense (and they were forced to do this by the $700 billion Emergency Economic Stabilization Act). In a hot housing market, a foreclosed home can be sold fairly quickly. In the current housing market, foreclosures can sit for months, slowly (or quickly) eroding in value. By letting renters stay in those homes, instead of evicting them, Fannie Mae can leave those properties on auto-pilot and worry about the rest. Also, as someone who has considered buying rental properties, an occupied property is more valuable than a vacant one. It’s unorthodox but we live in challenging times.

I’m also glad renters aren’t getting screwed because their landlords were financially irresponsible. The renter shouldn’t be punished because the landlord made a mistake. I once knew a guy at one of my former employers who owned four homes during the housing boom. He would buy them with a low rate ARM, wait a few months, then use whatever equity he had built up to buy another. I used to hear me argue all the time on the phone with tenants about broken water heaters and I had no doubt he was a miserable landlord. Well, I heard now that all those properties are behind and now those tenants would probably be evicted.

One of the benefits of owning your home is control. When you own a home, you are in control. It may not seem like it sometimes but you truly do control your destiny, more so than if you are a renter. Unless you agreed to an ARM, your mortgage payment remains the same each year (it may go up because of taxes, but the principal and interest are the same). You won’t one day discover you have to move because your landlord was foreclosed.

That being said, I’m glad 4,000 families won’t have to be searching for a home in the winter. What do you all think of this?

(Photo: respres)

Between 1933 and 1936, President Franklin D. Roosevelt initiated a series of economic programs and policies that would be termed the New Deal. It was intended to give relief to the unemployed, reform business and financial practices, and help the struggling economy fight through the woes of the Great Depression. While many of the programs and regulations were unwound in subsequent years, many of its programs are still in place today such as the Federal Deposit Insurance Corporation, the Federal Housing Administration, the Tennessee Valley Authority, the Social Security System, and the SEcurities and Exchange Commission.

On December 6th, 2008, President-elect Barack Obama unveiled, in his weekly address, his version of the 21st Century New Deal, designed to achieve similar goals, most notably to bring the United States out of the recession it currently faces. He seeks to achieve this aim by investing billions of dollars into improving the transportation infrastructure in this nation, roads and bridges, that has been severely underfunded (as evidenced by the studies following the tragic collapse of I-35W in Minnesota, killing 13 and injuring 145). Today, President-elect Obama outlined the principles of his plan (5 minutes) to create 2.5 million jobs.

Here were the major points of his program:

• Improve energy efficiency of public buildings, by upgrading those buildings with new HVAC systems and energy efficient lightbulbs.
• Extend funding to improve the infrastructure of the federal highway system (“single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s”), with a deadline for allocation so that states move quickly to use what is allocated. This is intended to create a great many jobs.
• Modernize and upgrade school buildings from both an energy efficiency perspective, like public buildings, as well as outfit them with new computers.
• Extend the reach of broadband internet access, improve the United States’ rank of 15th in the world in broadband adoption.
• Interconnect hospital medical records through the internet by modernizing the health care system.

The address lacks details and numbers because it’s impossible to give details and numbers until January 20th. What you will hear is him explaining the major points of his plan, none of which include a stimulus check to families. I’d argue though that the stimulus checks did nothing to improve our situation and a family facing job loss would much rather have the option of working on an infrastructure plan than cashing a $300 check.

Breaking: Obama unveils 21st Century New Deal [Politico]

If you’ve been thinking about going to the inaugural ceremony of the 44th President of the United States, wait in line. A week or two ago, scalpers were trying to sell tickets to the inauguration on sites like StubHub and eBay for thousands of dollars. No one told the prospective buyers that tickets hadn’t even been issued yet! In fact, no one has tickets to sell in the first place because they won’t be issued until early January. There are only 240,000 tickets for the West Front of the Capitol, where the inauguration takes place, but most of those seats don’t have much of a view either. 240,000 tickets – not many at all.

How do you get an inauguration ticket? The best thing you can do is submit a request through your state’s Senators and Representatives (each are supposedly getting 200-500 a piece), though that likely will not result in much as they’ve all been inundated with requests. Senator Ben Cardin of Maryland, one of the Senators I requested tickets from, recently emailed me to say that they received 55,000 requests already and they are estimated to get only 400 tickets (some of which they will likely keep for themselves). All the names will be put into a drawing and winners notified in January.

• Senators: You can find your Senator by searching this list of Senators.
• Representatives: You can find your representative at “Write Your Representative” on the House.gov website.

While people recommend you locate the Senator and Representative representing your district, it probably doesn’t hurt to just ask them all. I don’t think it’d be worth it to ask those outside your home state though.

Expanding the area: The Joint Congressional Committee on Inaugural Ceremonies, the committee overseeing the inaugural, is looking into expanding the number of people allowed in the official inaugural zone (that 240k area). We’ll see how that goes.

If all else fails, you can always go to the National Mall and try to catch the inauguration on a huge Jumbotron. You won’t need tickets to go to the National Mall but you will have to fight with huge crowds just to get there. Most will be traveling by mass transit, probably the Metro train system, so good luck. If you aren’t a fan of crowds (just to see it on a Jumbotron, no less), you can always just flip on the TV.

However you ultimately choose to view the inaugural, it’ll be historic all the same.

(Photo: martinstelbrink)

I voted for Barack Obama.

I walked into the polling location, sign in, voted, and walked out in what felt like five minutes. Then my wife and I headed over to Chik-fil-a where we thought they were giving away sandwiches (the one near us wasn’t!). We ate there anyway because Chick-fil-a is a good place and then snagged our free coffee’s from Starbucks across the street. Not a bad voting experience!

Now, I hope you all won’t mind if I share a few thoughts about my decision. I share some of the same feelings about him as Marc Andreessen, who is pretty well known in Silicon Valley and, among other things, helped create Mosaic. Here are some of my other thoughts about him, the Election, John McCain, etc. I don’t write much about politics, I know it’s a heated topic and I try not to play with fire too much, but this is pretty much a brain dump and feel free to share your own in the comments.

There are two things I feel the next President has to do:

• Improve our standing in the world – The wars in Iraq and Afghanistan, how the Bush administration justified it (great and scary Frontline doc about it), and everything else have really knocked the United States down a peg or two or ten. I believe Barack Obama has both the charisma and the humility to improve how the world sees us.
• Reduce our reliance on fossil fuels, especially foreign oil, and reduce our impact on the environment – Obama has said that our approach to finding alternative sources of energy should mirror that of Kennedy’s approach to landing on the moon, I really think we do need a goal like that. It’s unfortunate that so much of politics is dominated by groups with a huge stake in maintaining our reliance on fossil fuels (coal industry is huge in the swing states of PA and OH, Detroit automakers are detrimentally tied to gas guzzlers, Big Oil needs no explanation).

I don’t think McCain or Obama will be able to cut taxes, the economic conditions are such that cutting taxes is near impossible. Taxes will go up and they will have to go up. I bet we’ll see the Social Security maximum raised, some brackets shifting upwards (less so for the lower brackets), and some tax cuts permitted to sunset. It’s like elder Bush and his famous “Read my lips, no new taxes” line that he had to renege on – the realities of the environment will dominate any promises.

As for the big focus on “wealth redistribution?” We’ve been doing it for years, it’s called the progressive tax system. While it seems like you’re punishing success and being a bit socialist, the alternative is far worse. Imagine a nation where there is an upper class and a very large lower class with few economic opportunities, filled with anger, desperation, and despair, and with very few options. Not pretty huh? America is still the land of opportunity, even if success is taxed a little more.

The funny part is how the Bush’s tax cuts, coupled with ridiculous spending, redistributed wealth from the poor to the rich. It was a little sleight of hand though The cuts lowered taxes on the rich (no one upset by that huh?)by lowering capital gains. Lowering capital gains is a huge coup for anyone who was rich because they were more likely invested in things that give capital gains (stock market, real estate). If you were in the top tax bracket of 35%, long term capital gains is a mere 15%… that’s a 20% discount! This also had the effect of making the stock market more appealing, which boosts share prices, which makes everyone feel richer.

I am a little concerned about how Democrats will control both the Legislative and Executive branches, but I’m OK with it for now. I do like the idea of checks and balances. The bail out bill was four pages long when it was first introduced, thankfully a Democrat legislature and a Republican executive existed to slow it down and put a little framing around it. While I often complain about the slowness of government, in this case I’m glad things weren’t rushed. While having a single party control both branches is a little disconcerting, I’ve come to terms with that.

As for Joe the Plumber? Comedy. Pure comedy. I don’t know how the nation was convinced that someone earning $250K was somehow considered a “regular Joe.” If you make $250,000 (if it’s a business, that’s $250,000 profit), I’d say you’re doing pretty good.

Finally, I have the utmost respect for John McCain. I liked him far more before he adopted his strategy to appear closer to Bush to appeal to the Republican base (something I learned in Choice 2008, another great Frontline doc) but that’s part of the political game. I don’t fault him for his involvement in the Keating Five scandal and I think he’d make a fine President if he were elected.

If you haven’t voted yet, please go and vote.

That simple question is enough to get a lot of people to vote.

So, I’m curious, did you vote yet? If so, and you are so bold, for whom did you vote for?

This afternoon I’ll post mine if you post yours.

(As of this posting, I have not yet voted, but I will soon; I’ll remove this sentence once I’ve voted)

(Photo: orangejack)