President-elect Barack Obama's economic team supports spending between $40 billion and $100 billion from the remaining financial sector bailout specifically to reduce the number of foreclosures, a top Democrat said Wednesday.
House Financial Services Committee Chairman Barney Frank said Obama's top economic adviser, Larry Summers, assured him that Obama would devote such money to help homeowners avoid defaulting on their mortgages.
Such a commitment is the most specific glimpse at what Obama would do with the remaining $350 billion of the Troubled Asset Relief Program. Obama has asked Congress to release those funds.
Frank has legislation before the House that would set conditions and new goals for the money, including money dedicated to foreclosure mitigation.
Earlier, Rep. Charles Rangel, D-N.Y., Congress' top tax writer, said Obama's Democratic allies on Capitol Hill are trying to use the president-elect's economic recovery bill to extend a tax cut for middle- to upper-income taxpayers despite concerns from his transition team that it won't boost the economy.
Rangel said both House and Senate members feel strongly about using Obama's stimulus package to make the annual fix to the alternative minimum tax to prevent more than 20 million additional tax filers from having to pay it.
Making that fix for one year alone will cost about $70 billion, a healthy chunk out of the $300 billion that Obama has set aside for tax cuts in his emerging $850 billion stimulus plan.
The AMT "patch" is usually dealt with in the fall, but doing it now makes lawmakers' jobs easier.
The AMT was designed in 1969 to make sure wealthy taxpayers pay at least some tax. But it was never indexed for inflation and therefore threatens to trap millions of people for whom it was never designed.
The Obama economic team has been resisting adding the AMT fix to the economic recovery bill, arguing privately that it won't do much to help the economy. It's virtually certain to be addressed later if left alone now — and in any event, the effects wouldn't be felt until next year's tax-filing season.
Rangel, the Ways and Means Committee chairman, said other tax provisions would have to take a "haircut" to pay for dealing with the AMT. A $3,000 job- creation tax credit — which drew strong objections as unworkable anyway — appears likely to be jettisoned from the Obama plan.
Also threatened is a pro-business provision proposed by Obama that would allow companies posting losses last year to get refunds for taxes paid as far back as five years earlier.