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This article was published on: 09/01/2004

FRONT LINES: Exclusive Election 2004


Different roads to growth

President George W. Bush and his Democratic challenger, Massachusetts Senator John F. Kerry, bring very different ideas to the 2004 presidential race on how to keep the economy, and real estate markets, strong. In this REALTORŪ Magazine exclusive, the candidates present their views on issues that are important to the real estate industry.

Bush says making his signature tax cuts permanent is priority No. 1 because households and entrepreneurs need tax certainty to make key economic decisions. Kerry says cutting the federal deficit in half would help hold interest rates down and keep the economy chugging.

Both Bush and Kerry are solid proponents of private property rights and maintaining the autonomy state and local governments wield over land use issues. But both see a federal role in helping to shape community growth. Bush wants to put money into roads and highways to help close the commuting gap for households that must search far from their jobs to find affordable housing. Kerry wants to use federal incentives to get localities to better coordinate transportation and housing.

Affordable housing is on both candidates’ agendas. Bush wants to see his single-family housing development tax credit passed to ease the inventory crunch for starter homes; Kerry wants to put more resources into buyers’ hands by expanding FHA financing. He also wants to tap federal incentives to preserve existing affordable rental stock.

On one of NAR’s key issues, federal preemption of state laws regulating federally chartered banks, the two differ sharply. Bush defends the Office of the Comptroller of the Currency’s initiative earlier this year to remove federally chartered banks from certain state regulatory controls. Kerry, sharing NAR’s view, criticizes the OCC action.

On the association’s biggest legislative priority, stopping the U.S. Treasury Department’s push to allow banking conglomerates to enter real estate brokerage and management, President Bush says he’s adhering to the current congressional prohibition on finalizing the rule. Although his administration introduced the rule, Bush takes no position on whether it should go forward. Kerry is noncommittal on the proposed rule.

REALTORŪ Magazine posed the following questions to the candidates in writing this summer. Here’s what they had to say in their own words*:

Domestic priority

What will be your domestic policy priority going into 2005?

BUSH Make tax relief permanent. That way, families and businesses can plan for the future with certainty, creating the conditions for risk-takers and entrepreneurs to invest, grow, and hire new workers.

KERRY Stop spiraling health care costs. Insurance premiums, out-of-pocket costs, copayments, and deductibles are out of control, burdening families and undermining our economy. We must cut costs and expand coverage. My plan includes saving employees up to $1,000 in premiums a year. Every American should be able to get the same health care as any member of Congress.

Real estate markets

What economic policies will help keep home sales strong without causing the market to overheat?

BUSH Make the tax cuts permanent. That’s critical to maintaining homeownership growth without overheating the market. Also, savings proposals I’ve put forward such as Lifetime Savings Accounts and Individual Development Accounts help people buy homes. In addition, homebuying incentives such as the American Dream Downpayment Fund have helped to raise homeownership and minority homeownership rates by helping with downpayments, closing costs, and repairs. And increased funding for housing counseling is helping more families make smart financial decisions.

KERRY Keep interest rates lower by restoring fiscal discipline within the federal government. I will cut the deficit in half in my first term by rolling back tax cuts for families making more than $200,000 and restraining the growth of federal spending. In addition, I will jump-start job growth with a New Jobs Tax Credit, enforce our trade agreements, bring down the spiraling cost of health care and education, and invest in the industries of the future.

Affordable housing

What can the federal government do to help working households of modest income obtain housing near their jobs?

BUSH Increase the availability of affordable housing. To this end, I have proposed a $2.54 billion, five-year Single-Family Affordable Housing Tax Credit. The credit to developers is for up to 50 percent of housing rehabilitation and construction costs, provided the new homes are offered to buyers with incomes of up to 80 percent of area median income. I’ve also taken steps to increase housing availability through the American Dream Downpayment Act, signed in 2003, that will help some 40,000 families a year with downpayment and closing cost assistance.

KERRY I will emphasize a three-pronged approach: strengthening FHA single-family programs to get affordable mortgage financing into low- and moderate-income homebuyers’ hands, preserving existing affordable rental homes, and improving coordination among the local transportation and housing sectors.

Preservation is more cost-effective than building new housing. The U.S. Department of Housing and Urban Development has opened hundreds of thousands of state-financed affordable rental homes to possible “opt-outs,” which means that hard-working and elderly families might be facing unaffordable rent increases or be forced to move. In many of these cases, the federal government could pay higher rent subsidies to prevent tenant displacement.

In emphasizing FHA, I will also push to create low-downpayment programs for teachers, firefighters, police officers, and other municipal workers.

On transportation, better coordination of the use of transportation funds with the construction of affordable homes can lead to development along transportation corridors, reducing commuting times and road congestion, preserving open space, and creating housing opportunities.

Eminent domain

Municipalities, in an effort to generate more tax revenue, are increasingly using their powers of eminent domain to transfer property from one private owner to another for development of projects such as retail centers. Is this appropriate?

BUSH I support the rights of state legislatures to pass laws restricting the use of eminent domain as they see fit, within the context of the constitutional protection of eminent domain as a power granted to local government.

KERRY I support private property rights. I also believe the use of eminent domain by state and local governments is primarily a state and local matter. At the same time, we must take steps to alleviate the fiscal pressures on state and local governments, and I have proposed a new State Tax Relief and Education Fund that would provide $25 billion to help states balance their budgets, meet their homeland security needs, and avoid tax increases and the like.


States and localities are looking at increased property taxes among other measures to pay for their increased responsibilities under federal initiatives such as homeland security. What steps would you take to promote an equitable sharing of this growing burden?

BUSH To aid states with their budget shortfalls, Congress approved $20 billion in payments to the states in 2003. And the record federal tax relief we’ve passed is leaving more money in the hands of families, helping economic growth, which improves state and local budgets so they don’t have to raise taxes.

Although property taxes in some municipalities are increasing, tax rates in some areas are falling in response to the strong and steady growth in property values. The record level of homeownership in our country indicates that people can afford homes and current property tax rates.

My administration hasn’t imposed any unfunded mandates on the states for homeland security purposes.

KERRY My proposal for a State Tax Relief and Education Fund would provide $25 billion to help states bridge deficits. I will create a National Education Trust Fund to make sure the federal government meets its obligation to fund our education priorities. And my health care plan makes a new deal with the states: The federal government will pay the entire cost for children on Medicaid and assure that all eligible children are automatically signed up if states will pay their share to expand their children’s health programs to higher-income families and expand coverage to parents and single adults.

Federal preemption

The U.S. Office of the Comptroller of the Currency in early 2004 published rules preempting anti-predatory lending laws and other state measures regulating federally chartered banks and their operating subsidiaries. What’s the proper balance between states’ rights to regulate entities operating within their borders and the federal government’s interest in helping federally chartered businesses operate across state borders?

BUSH The OCC clarified the uniform federal standards under which its banks must operate, and it outlined additional consumer protections available to national bank customers, including provisions that target predatory lending. The regulation also provides that national banks shall not engage in unfair or deceptive practices. Individual states would remain free to regulate state banks as they deem appropriate. My administration believes strongly in the dual banking system and the balance of responsibilities between federal and state regulators.

KERRY I don’t support the new OCC rules preempting many state laws protecting their citizens. Many states have enacted consumer protection laws dealing with predatory lending, fair debt collection practices, servicing rights, and fair housing. OCC’s preemption of these laws is the wrong move.

Green building

What’s the federal government’s role in promoting environmentally responsible residential and commercial construction techniques?

BUSH The U.S. Department of Energy provided funding for the Rebuild America Program, which has formed more than 450 voluntary community partnerships to improve the energy efficiency of existing buildings. And the expansion of the EPA’s Energy Star program will help reduce pollution from commercial buildings by encouraging energy efficient design. Also, my proposed National Energy Policy encourages construction of buildings that are more energy efficient.

KERRY A Kerry administration will enthusiastically promote green buildings through certification programs, federal building design leadership, and building efficiency tax credits.

Livable communities

What can the federal government do to help ease transportation gridlock that many communities are facing as distances lengthen between residents and their jobs?

BUSH I proposed the Safe, Accountable, Flexible, and Efficient Transportation Equity Act to help ensure that our transportation system is safe, secure, efficient, and productive. Preserving flexible funding initiatives for states will allow them to direct funds to meet their state and local transportation needs.

Under the six-year SAFETEA proposal, highway funding will grow by 21 percent over the previous six-year bill, TEA 21. The Federal Highway Administration is working to deploy the Intelligent Transportations Systems infrastructure in more states to improve pavement condition, bridges, and infrastructural investment decisions.

To target traffic choke points, I have proposed an infrastructure program that would provide funding for “ready-to-go” projects to alleviate congestion.

KERRY The federal government can coordinate its transportation policies, housing policies, facility placement, employment practices, and land acquisition in ways that more effectively take into account local efforts to reduce congestion, preserve green space, and improve quality of life. It can also play a leadership role in spurring brownfields redevelopment and mass transit, which can help make our communities more livable while increasing access to homeownership.

*Answers edited for space but not substantively altered.

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