WASHINGTON (Reuters) - The Obama administration is still considering extending a popular housing tax credit but is weighing that against efforts to bring down the federal deficit, senior White House officials said on Wednesday.
The $8,000 tax credit, which will expire at the end of November, has boosted home sales in recent months, helping to revive a flagging housing market, which was a major factor driving the United States into a recession.
Lawrence Summers, top economic adviser to President Barack Obama, told Reuters there was a case to be made for extending the credit “in terms of supporting the housing market.”
But he added: “At the same time, we can’t afford everything for which there is a case.”
On Tuesday, Housing and Urban Development Secretary Shaun Donovan -- the administration’s top housing official -- expressed doubts the United States could afford to extend the tax credit for first-time home buyers beyond its expiration.
Valerie Jarrett, a senior adviser to Obama on business issues, said she was undecided about the program.
“I‘m not leaning any which way or another. I‘m still in the process of doing our due diligence on the program,” she told Reuters in a separate interview.
Jarrett said the White House was considering whether to continue a host of programs that had been used to boost the economy. “We have to measure them against how successful have they been. And so we’re in the process of doing that now,” she said.
“As we look at all the different ways that we could help jump-start the economy, we have to measure that against our desire to bring down the deficit.”
Summers said he thought it was important to keep the program’s emphasis on first-time home buyers. Some in Congress would like to broaden the credit to offer it to other home buyers as well.
Critics say expanding the credit might be wasteful because it could end up providing incentives to people who would have bought a home anyway.
“It does seem to me that concentrating on first-time home buyers has the virtue that you’re stimulating demand without also stimulating supply as distinct from (providing) the credit to those who are turning over a home,” Summers said in the interview.
But he also emphasized that in weighing whether an extension of the credit could benefit the economy, the White House would also consider its impact on the deficit.
Summers said the administration would look at the possibility of expanding the size of the credit, but on that issue, the impact on the deficit would be a consideration.
Additional reporting by Corbett Daly and Caren Bohan