January 29, 2008

Baucus Stimulus Bill Has Key Add-Ons

Senate Finance Committee Chairman Max Baucus, D-Mont., unveiled a roughly $156 billion economic stimulus package yesterday, adding low-income seniors and laid-off workers to those who would benefit from a previously agreed-upon House proposal. Business incentives would also be expanded to let companies write off losses going back five years, offsetting earlier gains and earning them refunds on previous tax bills.

"Rebates for seniors and payroll taxpayers, extended unemployment insurance, and tax relief for struggling businesses will put more cash into the American economy right away," Baucus said in a statement.

In the most significant departure from the House proposal, the Finance bill would extend jobless benefits through the end of 2008, making 13 additional weeks of unemployment insurance available. For states where unemployment rates are 6 percent or higher, an additional 13 weeks would be available.

The bill proposed by Baucus, which his panel will take up tomorrow, would send $500 rebate checks to individuals and $1,000 per family -- plus a $300 bonus for each child under 17 who qualifies under child tax credit rules -- provided recipients have $3,000 in qualifying income. Seniors who rely on Social Security would benefit. Unlike the House bill, qualifying income under the Senate Finance version includes Social Security retiree, disability and survivor benefits.

Rebate checks would be reduced slightly, down from $600 and $1,200 in the House version, to curb costs.

The Senate version waives eligibility limits for upper-income taxpayers; the House bill would phase out eligibility for individuals making more than $75,000 in adjusted gross income per year and $150,000 for couples. The Senate provision drew a rebuke from House Ways and Means Committee Chairman Charles Rangel, D-N.Y., who said the Senate was "walking on very thin ice" by including such a waiver and that it "would open Pandora's Box."

While Rangel said the Senate's possible inclusion of extended unemployment insurance benefits, food stamps, Medicaid funding or heating assistance "would improve on the solid foundation of the House package," he warned that "by eliminating the income cap, we would only further grow the divide between rich and poor that has already grown so much under President Bush's tax policies. I am concerned that this expansion would jeopardize the entire stimulus package."

The Senate version also would add a tax break sought by various industry groups that was dropped from the House bill, an extension of the net operating loss "carry-back" period from two to five years. Business groups say spreading out their tax liability over a longer period will help them to weather the impact of the economic downturn.

The Finance mark preserves the other two business planks of the House version, expansion of small-business equipment expensing and bonus depreciation for business property.

Senate Majority Leader Harry Reid praised the Finance Committee bill and said he would move quickly on a package as soon as it is ready. "I strongly support Chairman Baucus' efforts to garner bipartisan support to improve the House agreement, and I intend to take legislation to the floor as quickly as possible to strengthen the economy," Reid said in a statement.

House leaders and Bush had agreed on a roughly $147 billion economic stimulus plan and indicated any expansions above that figure could compromise their carefully crafted deal.

White House press secretary Dana Perino reiterated yesterday that Bush believes "Congress, and specifically the Senate" should not "delay or derail this agreement."

Baucus said that by allowing senators to have their say early on, it might actually speed up the process. "The White House says we mustn't slow the economic stimulus agreement down, or blow it up. I agree. We're going to improve it and get it passed right away," he said.

The package might grow as Finance members and other senators press for their proposals to be included. Energy tax incentives and Medicaid assistance for states are among the items that could be offered as amendments, and Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, is demanding that food stamp benefits be included as well.

Yesterday, senators from Mississippi and Louisiana wrote Baucus and Finance ranking member Charles Grassley, R-Iowa, asking them to include changes to bonus depreciation rules for Gulf Coast developers, builders and contractors. The 2005 hurricane relief tax package required that construction commence by Dec. 31, 2007, but senators said construction has been slowed by a variety of factors, such as environmental standards, building codes and "unending FEMA bureaucracy."

Rep. Earl Pomeroy, D-N.D., a member of the House Ways and Means Committee, said he and other Democrats, including House Speaker Nancy Pelosi, support items like expanded unemployment insurance. But he noted that Pelosi was working to ensure a swift bipartisan agreement, and things like unemployment benefits could be addressed should the economic downturn linger.

"There is very little, including creation itself, that the Senate does not feel it could improve upon if they were to give it a little time and attention," Pomeroy said.

-Peter Cohn, CongressDaily

Posted at 9:26 AM
Posted to: Bush Administration, Congress, Economy, House, President Bush, Senate
Share via