January 24, 2008
House Leaders: Stimulus Not Perfect But Will Do The Trick
UPDATED.
In a rare display of bipartisan camaraderie, House Speaker Nancy Pelosi and Minority Leader John Boehner urged colleagues to get their $145 billion compromise stimulus package to the White House ASAP.
"We will bring it to the floor at the earliest date so those rebate checks can be in the mail," Pelosi said during a joint press conference with her Republican counterpart and Treasury Secretary Henry Paulson, who represented the Bush administration during the late-night negotiations yesterday.
The legislation includes tax rebates from $300 to $1,200, with low-wage earners at one end and middle-income joint filers on the other. Recipients will also receive a $300-per-child bonus on top of what they get in rebates.
Those figures are lower than the expected $800-$1,600 range, but in exchange for lowering the disbursements, congressional Republicans agreed to extend the rebates to workers who don't earn enough to pay income taxes. Individuals who earned at least $3,000 in 2007 will get a check for $300, while mid-level earners would receive at least $600. Individuals earning more than $87,000 and families earning more than $187,000 won't get a check. Individuals who fall in the $75,000-$87,000 range and households in the $150,000-$187,000 would receive reduced checks.
"This is an initiative to strengthen the middle class and those who aspire to be in the middle class," Pelosi said, adding that the rebates were going to those who will "spend it right away to inject demand into the economy to help create jobs and to help turn around the economy."
Calling the deal "a big win for the American people," Boehner seconded Pelosi's assessment of the package. "It will stimulate our economy in the most direct and effective way possible, by putting money in the hands of middle-income families and giving businesses incentives to create and keep new jobs in the economy," he said
Both sides were forced to make concessions in order to reach speedy agreement on the package. Pelosi and her caucus gave up on an expansion of food stamps and unemployment benefits, and also consented to as much as $50 billion in tax breaks for businesses. In return, Republicans agreed to extend the rebates to the 35 million-plus workers who don't earn enough to owe income taxes and would have been ineligible for the rebates under President Bush's original plan.
"The Speaker gave some, we gave some. This was not easy, as most of you know, for the two of us and our respective caucuses... to have to come together and work in a bipartisan way and reach a compromise that I think is in the interest of the American people," Boehner said.
"I can't say that I'm totally pleased with the package, but I can say it will help the economy. And if it does not, there will be more legislation to come," Pelosi vowed.
The dropped food stamp and unemployment benefit provisions came as a surprise. Another unexpected component of the deal was negotiators' decision to allow Fannie Mae and Freddie Mac to purchase jumbo loans. Economists and Paulson himself have previously said raising the ceiling on those lenders would help loosen the very tight cashflow environment, but they met resistance from the White House. The deal signals that the administration is now on board with raising Federal Housing Administration loan limits to as high as $725,000.
Passage on the House floor is expected; then the Senate will get a turn to hack away or add to it. If Bush signs the bill next month, as is hoped for, about 116 million families will start receiving their rebates by June. That timeline is now largely dependent on the Senate, and the three key negotiators said they were hopeful the speedy and amicable agreement on the House version would be duplicated there.
"We were working together with one objective in mind, and one objective only: to help the U.S. economy as soon as possible and the American people," Paulson said. "I know the work isn't done yet; we've got more to do, and I'm looking forward to working with the Senate and House to get a package as soon as possible because, again, speed is of the essence."
Some Democratic senators said they might try to reattach provisions expanding food stamps and unemployment benefits. President Bush has hinted that the $145 billion price tag is about as high as he's willing to go, and in a press conference immediately following Pelosi and Boehner's, he said, "This package has the right set of policies and is the right size."
Paulson also appeared at the president's briefing, and in taking questions from reporters, would not say if the administration would outright reject a costlier package from the Senate. But, he added, "The American people are not going to have a lot of patience for taking time [on this bill]. We owe the American people speed, and we owe them a package that's going to work."
Bush and Paulson reminded reporters that at a teleconference last week, Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell seemed to recognize that passage of the stimulus was urgent. On Tuesday, which saw wild fluctuations in the U.S. and in key global markets following an emergency three-quarter-point rate cut by the Federal Reserve, Reid told reporters that he wanted to send a bill to Bush by the Presidents Day recess next month.
Though some Democrats -- particularly those running for president -- may try to dig their heels in on the benefits dropped from the compromise, they may not have to. Unemployment remains historically low, and so far there isn't a huge clamor to extend those labor benefits. Households struggling to pay for food, especially this winter amid sky-high energy costs, may get relief elsewhere. Ohio Sen. Sherrod Brown (D) is introducing legislation that would grant $40 million in emergency assistance to food banks, which are reporting alarming shortages across the country. He said over the weekend that he hoped that provision would be tucked into the stimulus. It was not, but it's possible he could introduce a bill separately or as part of another legislative package.
The food banks aid would have been a natural fit in the pending $286 billion farm bill, but lawmakers were unable to reach an agreement on that legislation before the winter recess. The Bush administration is fighting with farm-state lawmakers over some emergency aid provisions in that bill, such as a clause that would allow up to a quarter of food used in aid programs to be purchased overseas. Aid groups appear to be siding with the White House, which says the bill insufficiently addresses short-term food shortages here and in needy countries abroad.
Meanwhile, Wall Street appears somewhat heartened by the stimulus deal, though not greatly. Economists agree that there is no way to predict the effectiveness of the package until it's actually implemented. And some wonder whether handing out cash at the expense of an already ballooning deficit does more harm than good; see yesterday's post on this.
Posted at 3:40 PM
Posted to:
Bush Administration, Congress, Economy, Federal Reserve, House, President Bush, Senate, Taxes
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