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If you’re thinking of buying a home, there could be a big bonus for you in the economic stimulus bill that’s now before Congress.

Among its many provisions is a $7,500 tax credit for first time home buyers. The House passed the $819 billion stimulus plan, including this tax credit, in a vote late Wednesday. The Senate may vote on its version of the bill some time next week.

Technically, the stimulus bill is actually changing the terms of the $7,500 tax credit that was issued as a part of the Housing Recovery Act, which Congress passed last summer. That legislation required that the tax credit be repaid over 15 years, making it more of a no-interest loan. Not surprisingly, the measure had little impact on the market. The stimulus bill now under consideration would make that tax credit a true credit that doesn’t need to be repaid.

Many in the housing industry believe this credit could do a lot to jump start the moribund housing market.

"Our economists have studied the effect [of the credit] and they say there could be a 10% increase in home sales if it’s implemented," said Mary Trupo, a spokeswoman for the National Association of Realtors. "It gives people who are sitting on the fence or who have inadequate funds for closing costs an incentive to act now."

A 10% increase would yield an extra half million sales this year.

Who qualifies

To be eligible, buyers cannot have owned a home for the past three years, and the new home has to be used as a primary residence. The credit phases out as income rises above $75,000 for singles and $150,000 for couples, and disappears entirely at $95,000 and $170,000, respectively.

Applying for it is easy, or at least as easy as doing your income taxes. Just claim it on your return. That’s it. No other forms or papers have to be filed.

Both the Senate and the House versions of the new act remove the requirement that buyers repay the credit. The Senate bill applies retroactively to any purchase completed between January 1, 2009 and the end of August. The House version is also retroactive to the start of the year, and expires at the end of June. As long as buyers don’t sell for at least 36 months, they keep the money paydayloans.com.

And the credit is refundable, meaning that it can be claimed even if the amount of the credit earned exceeds the buyer’s tax liability. So even if your total tax bill comes to just $5,000, you can still qualify for a full $7,500 refund.

The housing industry has been pushing this idea for many months, arguing that first-time homebuyers are the key to boosting home sales. First time buyers who purchase from existing homeowners free those sellers to trade up to bigger, better houses.

Buyers beware

But the credit has its drawbacks, according to Bob Williams, a spokesman for the Tax Policy Center, which gave it a mediocre C+ grade in its Tax Stimulus Report Card.

Williams argues that the credit is poorly targeted because it goes to every first-time buyer, not just the ones who wouldn’t buy without it. So, it merely provides a windfall for many people who would have purchased anyway. (See correction, below).

And in the end, a $7,500 tax credit, regardless of the details, does nothing to address the issue that’s holding most buyers back - the suspicion that prices are going to keep falling.

"As long as people are uncertain about what markets are going to do, this won’t help much," said Williams. "It’s not enough to change that."

The industry would like to make the tax credit stronger by making it available to all homebuyers, not just first-timers. And it’s pushing to have the credit last through the end of the year, at least.

"By the time it’s implemented," said Trupo, "there could be very few months left to act."

An earlier version of this story incorrectly stated that the tax credit for a home purchased in 2009 could only be taken off of 2009 taxes. However, homebuyers can choose to take the credit for 2008, according to the IRS. Even if they buy a home after they’ve filed their 2008 taxes, they can file an amended return. 

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President Barack Obama’s top economic adviser would not rule out Sunday that more money may be needed to stabilize the U.S. financial system as a deep recession increases banks’ losses.

Lawrence Summers, head of the National Economic Council, also said there was no question that tax cuts passed under former President George W. Bush needed to be repealed, though he would not be pinned down on exactly when.

"We can make important progress and get started with the support that has been provided," Summers said on NBC’s "Meet the Press" when asked whether taxpayers should expect another request for funding to shore up the financial system. "What ultimately will be necessary is something that will play out over time."

House Speaker Nancy Pelosi said earlier that "some increased investment" may be needed beyond the $700 billion approved last fall.

The bailout fund was first pitched as a way to get bad assets off the banks’ books in the hope that doing so would help restore normal lending and get the economy going.

Instead, most of the money has gone to buy stakes in banks, and both Democrats and Republicans have complained that the cash was doled out with too few strings attached and insufficient oversight.

But as the economy weakens and unemployment rises, the pile of bad debts on bank balance sheets is likely to grow, which may force Obama’s administration to take bolder action.

One idea that has been much discussed on Wall Street is setting up a "bad bank" that would serve as a repository for those assets that are difficult to value or sell. Summers did not comment directly on that concept, although other members of Obama’s economic team have mentioned it as an option payday loan.

Summers said Obama and his choice for Treasury secretary, Timothy Geithner, would provide more detail on economic policy in the coming weeks, but they said an $825 billion stimulus package working its way through Congress is the proper size and shape to help revive the economy.

Responding to criticism that the package contained too little immediate help, Summers said Obama was committed to spending three-quarters of that sum in the first 18 months.

"We’re not going to rush things to the point of being wasteful," Summers said. Items like tax cuts and aid for state and local government would provide quick assistance, he added.

While Obama has pledged tax reductions for 95% of households, Summers said Bush’s tax cuts must be repealed because the country is facing a severe budget gap and a massive longer-term entitlement spending burden.

"I don’t think there’s any question they have to be repealed," Summers said. "The country can’t afford them for the long run. They have to be allowed to expire. What the timing will be, that’s something that’s got to get worked out through the legislative process."

Summers would not say when he thought the tax cuts should be eliminated, and the leader of the House Republicans said he did not think that would happen this year.

"I’ve got my doubts whether they’ll be bold enough to do that," Rep. John Boehner of Ohio said on "Meet The Press".  

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Congress is racing to pass a giant bill to stimulate the economy. But a key piece of it may be a little slower in coming than many people expect.

The biggest single tax break in the Democrats’ proposed economic recovery package is the $145 billion "Make Work Pay Credit."

The credit, which President Obama championed, would reach close to 95% of workers and be paid primarily through paychecks. It would be worth $500 per worker or $1,000 for working couples who file jointly. The full credit will be available to those making $75,000 or less, or $150,000 or less for couples. Even workers in those income groups with no tax liability would get it.

The bill is still being debated. But as things currently stand, workers may not see that money until June. And some of the lowest wage workers - those who economists say are most likely to spend the money rather than save it - may not see their credit until they file their 2009 federal tax return sometime next year.

But for the credit to be paid out in workers’ paychecks, employers will need to change how much tax they withhold. And they would need new withholding tables from the Treasury Department to do that.

Thomas Barthold, a deputy chief of staff at the Joint Committee on Taxation, told lawmakers on the House Ways and Means Committee on Thursday that he understood Treasury may not be able to get those tables to all employers before June 1.

That means it could take 15 weeks if the bill is enacted by President’s Day, as Democrats have promised.

The American Payroll Association paints a slightly more optimistic picture. The trade group, which represents payroll specialists, was told by Senate staffers that Treasury might need only 10 weeks to revise and distribute the withholding tables, said Michael O’Toole, APA’s senior director of government relations and publications.

Meanwhile, a Ways and Means staffer told CNNMoney.com Thursday, "We’ve heard they will do them as quickly as possible."

A Treasury spokesman was not immediately available for comment.

Economists have been urging lawmakers for months to act swiftly to get money distributed to states, businesses and consumers to help stem the economic downturn payday loan lenders. And many, like Lakshman Achuthan, managing director of Economic Cycle Research Institute, have stressed that the timing of stimulus is paramount to its success.

"This would have been great a year ago, but now consumers are so defensively oriented that the boost to the economy will be more limited," Achuthan said. "Any substantial delay from today increases the risk that the economy will tumble into a much deeper recession, which will be all the more difficult to climb out of later."

Mark Zandi, founder of Moody’s Economy.com whose research has been relied upon by the Democrats to make their case for stimulus, was a little more optimistic. He said June 1 is not too late but that an earlier start would help boost the economy more.

"Every day matters," Zandi said. "The economy will be under severe pressure early this year, and the benefit of the stimulus could be overwhelmed if it doesn’t get into the economy quickly."

Even if Treasury is able to turn out new withholding tables on a dime, the way the provision is currently structured, the lowest income workers may not see their 2009 credit until the first quarter of 2010.

"The biggest sticking point is for people who have very little or no income tax withheld because they earn too little or take a lot of exemptions. They’d have to wait for some or all of their credit until they file [their tax return]," O’Toole said.

Of course, the lowest paid are also those most likely to be living paycheck to paycheck and more likely to spend the money quickly.

Even middle-income folks will have to wait to get some of their 2009 credit since the full $500 per worker likely wouldn’t all be paid out this year since it would go into effect after a considerable number of pay periods have passed. Workers could claim the unpaid portion of the 2009 credit on their federal tax return due April 15, 2010, according to the Ways and Means Committee. 

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The New York Times Co. said it will get a $250 million investment from one of the world’s richest men, Mexican billionaire Carlos Slim, a move that will give the company much-needed time to clear financial hurdles.

Slim, 68, who already owns 6.9 percent of the Times’s stock, will receive warrants in the company that could give him an eventual 17 percent interest in the publisher.

That would make him one of the largest shareholders in the venerable newspaper publisher, following the Ochs-Sulzberger family that has controlled the company for more than 100 years. It is unclear what Slim’s eventual aim is with the company.

The investment comes at a critical time for The New York Times. The company, which owns the namesake newspaper as well as The Boston Globe and other local U.S. papers, is struggling to pay off more than $1.1 billion in debt in the next few years, even as advertising revenue deteriorates.

The Times has $46 million in cash, but faces a $400 million credit facility that expires in May. The company is trying to sell its stake in the holding company that controls the Boston Red Sox baseball team and might sell more properties.

Slim, the world’s second-richest man with a net worth of $60 billion, according to Forbes magazine, has not said what his eventual intention is with the Times. A spokesman on Sunday declined to answer questions, including whether Slim wants to eventually buy the Times.

The drop in advertising revenue at publishing companies has partly come from a fundamental change in the way people read news fast payday advance. More people are getting it online for free and dropping print subscriptions. The world financial crisis has accentuated the fall in advertising revenue and media stocks have taken a battering.

The Times’s shares have dived 70 percent from their 12-month high of $21.14 in April 2008 to $6.41 on Friday.

Times Chief Financial Officer James Follo said Slim’s interest is purely financial, echoing a statement Slim made in September when he disclosed a 6.4 percent stake.

Slim approached the Times about an investment several months ago, Follo said.

RICH PATRONS

The investment illustrates how newspapers are turning to rich patrons to give them a lifeline to keep producing journalism even as their own financial fortunes wane.

It is an unusual move for the Times, which has been controlled by the Ochs-Sulzberger family since 1896 through a special class of shares. The family also owns about 20 percent of the company in publicly traded and special shares.

The Times had not allowed outsiders on its board until last year, when hedge fund Harbinger Capital Partners bought a stake about equal to that of the Sulzberger family. The fund demanded the company give it representation and consider selling non-core properties to turn around its flagging stock price.

Under the terms of the deal, Slim will invest through his Banco Inbursa S.A., Institucion de Banca Multiple, Grupo Financiero Inbursa and Immobiliaria Carso. 

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U.S. industrial production fell twice as much as forecast in December as companies pulled back to try to weather the global economic slowdown. Auto output fell to the lowest in more than a quarter century.

Output at factories, mines and utilities dropped 2 percent, after a revised decline of 1.3 percent in November that was more than double the previously reported decrease, the Federal Reserve said today in Washington. Plant use matched the lowest level since 1983.

Factories are reducing output and spending as export demand drops and U.S. retail sales endure the longest string of declines in at least 16 years. Democrats in the U.S. House of Representatives yesterday released a summary of an $825 billion economic-stimulus proposal that would boost government spending and provide more tax cuts to families and businesses.

“Manufacturers, led by automakers, are trying to keep up with the nosedive in demand by slashing inventories and costs,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, said before the report.

Another government report showed the cost of living in the U.S. fell in December as the recession deepened, capping the smallest annual gain in a half century.

Consumer Prices

Americans paid 0.1 percent more for goods and services in 2008, the least since 1954, the Labor Department said in Washington. Consumer prices fell 0.7 percent in December after dropping 1.7 percent the prior month. Excluding food and energy, costs were unchanged.

Industrial production was projected to drop 1 percent, according to the median forecast in a Bloomberg News survey of 77 economists. Estimates of the decline ranged from 0.2 percent to 2.5 percent.

Capacity utilization, or the proportion of plants in use, fell to 73.6 percent, matching the lowest level since April 1983, from 75.2 percent in November. Last month’s plant use rate was 7.4 percentage points below the average level for 1972 to 2007, the Fed said. Economists had forecast plant use would fall to 74.5 percent, according to the Bloomberg survey.

Factory output, which accounts for about four-fifths of industrial production, decreased 2.3 percent, led by a 7.2 percent decline in production of autos and parts.

Regional reports yesterday showed manufacturing continued to deteriorate in the New Year. The Federal Reserve Bank of New York’s Empire manufacturing report was minus 22.2 in January, while the Philadelphia Fed’s general economic index was minus 24.3. Negative numbers signal contraction.

The New York Fed’s measure of business expectations for six months from now was negative for the first time since the survey began in 2001.

Fed’s Survey

“Manufacturing activity decreased in most districts” in the past month, the Federal Reserve said earlier this week in its regional business survey, known as the Beige Book faxless payday loan. The report also showed the economy weakened further across almost all regions and that there was “reduced or low activity across a wide range of industries” in most districts.

Christina Romer, President-elect Barack Obama’s choice to lead the White House Council of Economic Advisers, told lawmakers yesterday that the economy is “deteriorating rapidly.”

Obama consulted with the House of Representatives on their stimulus legislation. He had earlier been discussing a package of about $775 billion.

The decline in motor vehicle and parts production in December followed a 2.5 percent drop a month earlier, the report said. Automakers assembled cars and light trucks at an annual rate of 6.43 million during the month, the lowest since November 1982.

Consumer Goods

Production of consumer durable goods, including autos, furniture and electronics, fell 4.7 percent.

Chrysler LLC, whose sales in December dropped 48 percent from a year earlier, shut down production at its 30 plants for a month at the end of December. It is scheduled to start reopening the facilities next week though is still considering keeping them idled longer, spokesman Dave Elshoff said earlier this week.

Utility production decreased 0.1 percent after rising 1 percent a month earlier. Mining output, which includes oil drilling, dropped 1.6 percent after a 2.2 percent increase.

A slowdown in global demand has taken away one of the bright spots that manufacturers had most of last year. U.S. exports decreased 15.2 percent from August to November, the biggest four-month decline since at least 1992, according to Commerce Department data.

Alcoa Inc., the largest U.S. aluminum producer, said Jan. 12 that demand for the metal may continue to weaken this year. Chief Executive Officer Klaus Kleinfeld, who has already announced production and job reductions, said he may make deeper cuts if demand continues to wane.

Alcoa has set production cuts since June representing about 750,000 metric tons, or 18 percent of its global capacity. The company said on Jan. 6 it plans to fire 13,500 employees this year, eliminate 1,700 contractors and cut 2009 capital spending by 50 percent. The company said yesterday it would post $920 million in losses, including discontinued operations, related to the restructuring plan.

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A judge ruled Monday that Bernard Madoff would not be sent to jail pending trial, declining a request by prosecutors to revoke the bail of the financier accused in a $50 billion fraud case.

Madoff has been under house arrest, with electronic monitoring, since posting $10 million bail against his $7 million Manhattan apartment, where he lives with his wife, and against his wife’s homes in Montauk, N.Y., and Palm Beach, Fla.

U.S. Magistrate Judge Ronald Ellis of the U.S. District Court of the Southern District of New York added conditions to the bail, including "restrictions of transfer of all property whatsoever, wherever located" belonging to Madoff.

The judge also ruled that Madoff compile an inventory of all "valuable portable items" in his Manhattan home. The judge required that a security company check the inventory every two weeks and inspect outgoing mail.

"The decision speaks for itself and we intend to comply with the judge’s order," said Madoff’s defense attorney, Ira Lee Sorkin.

Janice Oh, spokeswoman for the prosecution, declined to comment.

Prosecutors have been trying to put Madoff behind bars since last week. That’s when the U.S. Department of Justice filed documents to Ellis accusing Madoff of shipping five packages containing more than $1 million worth of diamond-studded jewelry to family and friends, in violation of bail.

Prosecutors said last Wednesday that Madoff was trying to protect these assets - which included 15 watches, four brooches, necklaces and rings - from seizure, preventing alleged victims from recovering their losses fast payday loan no faxing.

Last week, defense lawyer Sorkin said Madoff didn’t know he violated bail when he mailed these "sentimental" items, and that some of the packages were actually sent by his wife.

Prosecutors on Thursday urged the judge once again to revoke bail, accusing Madoff of planning to transfer up to $300 million worth of assets - including 100 signed and ready-to-send checks found in his office, totaling $173 million.

But on Monday, the judge released a statement saying "the new information provided by the government does not demonstrate either a serious risk of flight or serious risk of obstruction of justice."

Madoff was arrested in December and charged with one count of securities fraud for allegedly stealing up to $50 billion from investors. If convicted, the 70-year-old could face up to 20 years in prison and a $5 million fine.

Madoff’s alleged scheme disrupted an already fragile financial system, affecting hedge funds and well-heeled investors from Wall Street, Palm Beach and Europe. Alleged victims included Banco Santander (STD) in Spain and HSBC (HBC) in Britain, as well as director Steven Spielberg and actor Kevin Bacon.

In a Ponzi scheme, money from new investors is used to pay off early investors to create the appearance of legitimate returns. 

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Department-store operator Macy’s Inc. said Thursday it will close 11 underperforming stores in nine states - affecting 960 employees - and lowered its forecast for the fourth quarter after one of the weakest holiday seasons in years.

The Macy’s at Crestwood Mall, which opened in 1969, will be closed. It employs 176 people, Macy’s said in a statement posted on its website.

Dillard’s closed its Crestwood mall store in 2007. Sears remains.

Jim Eckrich, Crestwood’s city administrator, told the Post-Dispatch that he learned of the closing in a conference call this morning with representatives of Macy’s and the mall’s owner, Centrum Properties. Eckrich said the officials told him the store will close April 1.

"Obviously, it’s not good for the city," Eckrich said.

He said Sears, which will become the mall’s lone remaining anchor, is a "strong store." Eckrich added that a Centrum official told him the company will strive to keep the remaining tenants.

Eckrich estimated the closing would cost the city of Crestwood $350,000 in taxes this year. That’s about 2.5 percent of the city’s $13.7 million budget.

Other Macy’s stores slated to close include locations in Los Angeles, West Palm Beach, Fla., and Nashville, Tenn., among others. Cincinnati-based Macy’s Inc. says the closures will cost about $65 million, most of which will be booked in the 2008 fourth quarter.

Clearance sales at the stores begin next week.

"These closings are part of our normal-course process to prune underperforming locations each year in order to maintain a healthy portfolio of stores," said Macy’s Chief Executive Terry J. Lundgren in a statement.

Employees at the stores that are closing may be considered for open positions at other Macy’s stores, the company said fast cash loan online.

Department-store operators have been among the harder-hit in the retail sector as consumers cut back amid the recession, hunting for bargains and trading down to discounters.

Macy’s reported Thursday that its December sales at stores open at least a year, or same-store sales, fell 4 percent - still not as bad as the 5.3 percent drop analysts surveyed by Thomson Reuters were expecting.

Total sales for the five-week period ended Jan. 3 fell 5 percent to $4.4 billion from $4.61 billion last year.

Same-store sales fell 7.5 percent during the combined November and December holiday period. Macy’s said the holiday season ended with improving sales in the fourth and fifth weeks of December but that sales were sluggish before that.

The company said it marked items down sharply in the fourth quarter to gain sales and reduce its inventories, but that hurt its margins and led it to lower its profit forecast for the fourth quarter and full year.

Macy’s now expects earnings of 90 cents to $1 per share in the fourth quarter, down from its previous guidance of $1.10 to $1.30 per share. Analysts expect earnings of $1.11 per share.

For the full year, the company now expects to earn $1.10 to $1.20 per share, down from its previous forecast of $1.30 to $1.50 per share. Analysts expect a profit of $1.35 per share.

Tim Bryant of the Post-Dispatch contributed to this report.

tbryant@post-dispatch.com 314-340-8206

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President-elect Barack Obama’s economic stimulus package will include hundreds of billions of dollars worth of tax breaks for individuals and businesses, according to a transition official and Democratic aides.

Obama is asking that tax cuts make up 40 percent of a stimulus package, the people say. The measure may be worth as much as $775 billion, a Democratic aide says, meaning tax cuts may constitute more than $300 billion of the legislation.

The dollar today rose to the highest level in almost three weeks against the euro and also surged against the yen on speculation that the Obama plan would help the U.S. economy recover from recession.

Making tax cuts such a large part of the stimulus may help win support from congressional Republicans. Senate Minority Leader Mitch McConnell, a Kentucky Republican, said his party would support an immediate middle-class tax cut as part of any stimulus package.

“Republicans, by and large, think tax relief is a great way to get money to people immediately,” McConnell said yesterday on ABC’s “This Week.”

The plan would attempt to boost consumer demand by spending $140 billion on tax breaks worth $500 for individuals and $1,000 for couples, according to a House Democratic aide. The change would come by altering tax-withholding rules, rather than through a rebate check as with the previous stimulus plan enacted last year, so that workers would see an immediate increase in their take-home pay.

The $500 tax credit would apply to the first $8,100 of wages, meaning a worker who earns $24,400 a year and is paid twice a month would get about $60 extra per paycheck for four months.

Business Tax Breaks

For businesses, the aide said, lawmakers will use similar measures they’ve employed in past stimulus bills, such as allowing companies to get refunds for taxes paid in any or all of the past five years by deducting losses they’ve incurred now; those losses can currently only be carried back two years.

Congress is also likely to include incentives such as accelerated depreciation to encourage companies to buy equipment now rather than defer such investments. The plan also attempts to combat joblessness by offering companies tax breaks for hiring more workers, the aide said cash advance no fax.

The tax provisions are also likely to repeal the alternative minimum tax on municipal bonds issued to build airport runways, sewer systems and other privately run facilities that benefit the population at large, another aide said. Congress is unlikely to enact a new round of incentives for U.S.-based multinational corporations to repatriate foreign earnings at a discounted tax rate as urged by business groups such as the Chamber of Commerce, that aide said.

Accelerated Tax Breaks

Many of the business tax incentives would be accelerated so that any dollar written off now would not be able to be claimed in future years, the aide said. That would reduce the long-term impact of the tax cuts on the federal budget deficit.

Obama is slated to meet today with congressional leaders from both parties to discuss the plan. Democrats said Congress probably won’t be able to complete work on the plan by January 20, the day of the inauguration, as some had hoped.

“It’s going to be very difficult to get a package put together that early,” said House Majority Leader Steny Hoyer in an interview on “Fox News Sunday.” “We want to do this right.” He said he expects the House to pass the bill by the end of the month and get the legislation through the Senate and signed into law in February.

Urgency

Senate Majority Leader Harry Reid, in an interview yesterday on NBC’s “Meet the Press,” downplayed the importance of what he called a “false” deadline. “The urgency of this, everyone knows about — but I’m not going to have some false deadline,” Reid said. “It’ll take as much time as it needs to get done.”

Obama has called on lawmakers to quickly pass legislation to prop up the economy, which is in its worst slump in decades and could deteriorate further without significant fiscal stimulus. Economists surveyed by Bloomberg last month projected gross domestic product would shrink in the fourth quarter by 4.3 percent, the biggest decline since 1982.

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