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GOP Now Embraces Aid for Housing Crisis

With the economy continuing to decline and Congressional Democrats and the Obama administration intent on spending billions of dollars on an economic stimulus package, Senate Republicans have embraced the need to address the crippled housing market.

Senate Republican Conference Chairman Lamar Alexander (Tenn.) raised the issue with President Barack Obama during the GOP’s regular luncheon on Tuesday and again during the Senate Appropriations Committee markup of the stimulus bill.

Then on Wednesday, Alexander began circulating talking points to the Conference stressing the need to address the housing crisis, according to a copy of the memo.

Similarly, Minority Leader Mitch McConnell (R-Ky.) pitched the need to address housing issues during this week’s meeting of the Republican Steering Committee, and Budget Committee ranking member Judd Gregg (R-N.H.) took up the mantra during a committee hearing on Wednesday.

The decision to take up the issue of propping up the housing market is a stark reversal from last year, when Republicans by and large rejected Democratic demands that a series of stimulus and industry bailout bills include provisions to help struggling consumers keep their homes.

Although final details are still being worked out, the GOP’s plan will likely include a number of provisions, most notably language providing most homeowners and new homebuyers with the chance to receive a 30-year, 4 percent, fixed-interest rate mortgage that would include a one-and-a-half-year government guarantee, Republican lawmakers said.

Alexander said Wednesday that the GOP’s approach is threefold: “First, fix the problem: housing. Include tax relief that creates more jobs. And don’t spend money we don’t have on programs that don’t create jobs now,” he said.

Senate Republican Policy Committee Chairman John Ensign (Nev.), who has long been a critic of government intervention in the economy, acknowledged that Republicans are learning to change their tune.

“We’re in a different time than this summer. There are a lot of things a lot of us wouldn’t want to do” under normal economic circumstances, Ensign said, adding that although other steps will be needed, the housing crisis must come first. While “the cancer has spread ... you have to fix housing now.”

Sen. John Cornyn (R-Texas) agreed. “Most people have concluded that housing is a problem” since the economic downturn began in earnest this year and that addressing it first “could well be the best way,” Cornyn said.

One GOP Senator, who asked to remain anonymous, said Republicans are uncomfortable talking about government intervention in the housing markets because they don’t want to admit the gravity of the economic downturn and the need for the government to step in more forcefully.

“I think we had to too many people who were wedded to the notion that government shouldn’t be involved in these things,” the Senator said. “But the extraordinary times that we’re in have made some people reconsider.”

Sen. John Thune (R-S.D.), vice chairman of the GOP Conference, agreed that the shift in philosophy has taken some time and has been difficult for many Republicans to embrace because of their free- market beliefs.

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