April 10th, 2008 – Washington, D.C. – Today, U.S. Senator Jim DeMint (R-South Carolina) made the following statement after he voted against the Senate housing bill:
“This bill needlessly spends billions of dollars to bail out lenders, makes our tax code even more complex and will do little to nothing to stimulate our economy. In fact, this bill could have the perverse effect of increasing the number of foreclosures and reduce home values for American families nationwide. If politicians are serious about encouraging job growth and a strong economy, we should stop the largest tax increase in history that is about to hit Americans in just three years.”
Senator DeMint proposed an amendment to strike $4 billion for Community Development Block Grants (CDBG) in the bill, but was blocked by Democrat leaders from receiving a vote. The White House budget office, in a recent report, labeled the CDBG program as “ineffective,” lacking “a clear purpose” and lacking “transparent information on results.” The CDBG funds will be used to purchase and rehabilitate foreclosed properties and are misguided for several reasons:
• It funds government competition against private consumers. The properties to be purchased with this money are foreclosed, but still owned by private entities with a motivation to sell. Injecting $4 billion into what is already a buyers’ market for the government to compete with private consumers is unnecessary and potentially unfair.
• The market will likely be in recovery before these funds are used. Recipient governments need not actually spend the money until 18 months after they receive it. This money has the potential to sit on the sidelines for a year and a half (nearly the end of 2009).
• Unspent CDBG funds already exist. As of the end of FY07, the U.S. Treasury had over $20 billion in unspent CDBG funds.