Whither the homebuyer credit?

Whither the homebuyer credit?: "

Last night it seemed like a renewal of the $8,000 homebuyer credit (or as ABC radio news calls it, 'the Popular Homebuyer Credit') seemed a done deal. This morning Tax Analysts isn't so sure($link):

As passed by the House September 22, H.R. 3548 would extend unemployment insurance payments for jobless workers in states with high unemployment rates. The additional benefits would be offset by a one-year extension of the 0.2 percent FUTA payroll surtax.

But negotiations to add an expanded loss carryback benefit and some sort of extension of the $8,000 home buyer credit, now scheduled to expire November 30, appeared to have failed.

Sen. Johnny Isakson, R-Ga., one of the main proponents of renewing the home buyer credit, said he remains 'cautiously optimistic' that senators will pass an extension.

How well does this magic bean for the economy really work?

The main argument for the tax credit is that it stimulates the economy and stabilizes the housing market. Seen purely as a stimulus, the tax credit is highly inefficient. The National Association of Realtors claims that the credit created 350,000 new sales; the Calculated Risk blog calculates that this means the government is paying $43,000 for every extra house sold (since most sales would have happened anyway). According to the Wall Street Journal, Goldman Sachs estimates 200,000 new sales, implying a cost of $80,000 per marginal sale.

It's expensive and insane, so our Congressional supergeniuses will work day and night to keep it going.