1st Time Home Buyer Tax Credit-Obama Skeptical

The Obama administration is still considering whether to back a popular tax credit for first-time homebuyers but is skeptical the United States can pay for it.

The new homebuyer $8,000 tax credit, which will expire at the end of November, has boosted home sales in recent months, helping to revive a flagging housing market that had been a key factor driving the United States into a recession.

Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and Georgia Republican Senator Johnny Isakson want Congress to extend the credit through next June.

Isakson told the panel that failure to extend the popular tax credit would lead to "a dramatic and awful situation…"

Under questioning, Housing and Urban Development Secretary Shaun Donovan said the administration would make a decision in the coming weeks after it sees more data on just how much the tax credit will cost the government. Donovan was much less dire in his predictions for the housing market if the tax credit is not extended, saying "I do not believe that a catastrophic decline (in the housing market) would be the result of the end of the credit."

Stay tuned, we'll keep you updated right here on the progress of the tax credit debate.