Ford, Centex Would Be Winners Under U.s. Senate Stimulus Bill
The Senate is more generous to automakers and homebuilders than the House was in the $819 billion measure it passed last month. Alternative-energy companies and closely held builders such as Sundt Construction Inc. in Tempe, Arizona, fare less well under the Senate bill.
President Barack Obama, who has said he wants stimulus legislation on his desk by the weekend, is counting on the plan to help revive an economy that has lost 3.6 million jobs since December 2007, sending the unemployment rate to the highest level since 1992. The plan would trigger the biggest burst of public works spending since the interstate highway system was started in the 1950s.
Where the money goes will help shape the fortunes of companies and communities, said Rogan Kersh, associate dean of New York Universitys Wagner School of Public Service.
“In a bill this big, there are countless private-sector winners and losers,” Kersh said.
The Senate cleared a procedural hurdle yesterday by voting 61 to 36 to end debate on the measure, with three Republicans siding with Democrats. Senate approval of the bill today would force the two chambers to work out their differences.
Auto Deductions
Ford, General Motors Corp. and Chrysler LLC, along with overseas-based rivals that produce vehicles in the U.S., would benefit from an $11 billion provision in the Senate bill that would let car buyers deduct interest on auto loans and local sales taxes from their income taxes.
“Tax deductions on auto loans are very beneficial to a customer,” Mark Fields, Fords North American chief, told reporters Feb. 4. “On a $25,000 car, that can save you $1,500 to $1,600.”
U.S. auto sales fell 37 percent in January, the worst sales month since 1981. GM and Chrysler have received government aid to try to stave off bankruptcy.
“We really need consumers to just walk in the door” of dealerships, said Wade Newton, spokesman for the Alliance of Automobile Manufacturers, a Washington trade group for 11 automakers that backed the provision. “This is a crisis of consumer confidence.”
Centex,D.R. Horton Inc., and other U.S. homebuilders might see sales increase as consumers used a planned tax credit of $15,000, or 10 percent of the purchase price, whichever is less, under the Senate legislation.
“If someones going to give you $15,000 in free money it has to be stimulative,” said Eric Landry, an analyst at Morningstar in Chicago. “If nothing is done, were looking at another year of significantly lower starts.”
The new credit doesnt have to be repaid, and all homebuyers are eligible. It would replace a $7,500 tax credit for first-time buyers, passed last year, that had to be repaid over 15 years.
“Were pretty happy with the way the Senate bill is shaping up,” said Jerry Howard, president and chief executive officer of the National Association of Home Builders. “We think it will entice a lot of those people sitting on the sidelines into the marketplace.”
Howard said the group is “going to throw the kitchen sink” at the House to keep the provision in the final stimulus bill.
Companies anticipating a boost from public-school construction funded by the House bill would be disappointed if the Senate measure prevails. It eliminates almost all of the $20 billion the House allotted for that purpose.
School Construction
“Its penny-wise and pound-foolish,” Doug Pruitt, chief executive officer of Sundt Construction, said of the Senate cuts. “Theyre not thinking about the future.”
Add A Comment
You must be logged in to post a comment.