WASHINGTON -- Rep. Dan Rostenkowski has scheduled hearings for early next year in the House Ways and Means Committee on the expiring tax provisions, following up on his promise to examine the tax breaks and decide which should be made permanent.
The dates he chose -- Jan. 28 and 29 -- are "pretty significant, because it means they're going to move on a big tax bill quickly," said John C. Murphy, executive director of the Association of Local Housing Finance Agencies.
Earlier this week, President Bush signed into law six-month extensions of the expiring provisions, through June 30, 1992. The 12 tax breaks include the tax exemptions for mortgage revenue bonds and small-issue industrial development bonds, and the low-income housing tax credit.
When the Ways and Means panel approved the extensions last month, Rep. Rostenkowski said it was the last time he wanted the committee to continue any of the expiring provisions temporarily. He vowed to have his committee examine each tax break next year, with an eye toward making some permanent and letting others die.
Meanwhile, a National Association of Homebuilders official told Congress yesterday that the housing market and the overall economy would suffer it the housing credit and the mortgage bond exemption expire as scheduled next year.
"Failure to extend MRBs would cause a reduction of 16,000 to 20,500 single-family housing starts and 30,000 to 35,000 fewer housing starts per year after 1993," Jay Buchert, the association's president-elect, said in testimony prepared for a Senate Finance Committee hearing on proposals to stimulate the economy.
The drop in housing starts would, in turn, cause the elimination of 29,000 to 37,000 jobs in 1993, and more than 50,000 a year in later years, he added.
On the multifamily side, loss of the low-income credit would mean 60,000 fewer multifamily housing starts each year after 1992, Mr. Buchert said.
The committee also heard from several private economists who said they were not confident that the recession would end anytime soon, absent some kind of stimulus package enacted by the federal government.
"The momentum of the economy is negative," Allen Sinai, chief economist for the Boston Company Economic Advisors Inc., said in prepared remarks.
"As things stand now, the economy looks to be in an extended recession," Mr. Sinai said, adding that about 65% of the states are still in an economic downturn.
Real gross domestic product is likely to decline this quarter and in the first quarter of 1992, and may be followed by a further slight decrease in the second quarter, Lacy H. Hunt, chief U.S. economist of the HongkongBank Group, said in prepared testimony.
Beyond that, "the best that can be anticipated for the second half of next year is a sub-sub-par recovery, followed by a very unsatisfactory pattern in 1993," Mr. Hunt said.