January 31, 2008

Senate Panel Sends Stimulus Bill To Floor

The Senate Finance Committee voted 14-7 Wednesday to send a roughly $157 billion economic stimulus package to the floor, adding tax breaks for alternative energies and homebuilders and disqualifying upper-income taxpayers -- including members of Congress -- from getting rebate checks. Initially the proposal had no upper-income caps at the behest of Finance Committee ranking member Charles Grassley, R-Iowa, and other Republicans who considered such limits an unfair redistribution of wealth.

Under pressure from Democrats, Finance Committee Chairman Max Baucus, D-Mont., agreed to phase out eligibility for rebates beginning at $150,000 of adjusted gross income per single filer and $300,000 for couples filing jointly. Those limits are twice those in the House version, which costs $117 billion over 10 years.

Unlike the House bill, Baucus' proposal also provides rebate checks to about 20 million low-income retirees dependent on Social Security benefits. "They have worked hard all their lives. They have paid taxes for a lifetime," Baucus said. "The House-passed bill would not give a stimulus check to seniors who were scraping by on Social Security income alone and had no tax liability." Baucus also agreed to a proposal by Sens. Blanche Lincoln, D-Ark., and Olympia Snowe, R-Maine, making about 250,000 veterans on disability benefits eligible for rebates.

The measure faces an uncertain future as Senate Majority Leader Harry Reid as early as today plans to queue the House version. Supporters of the Baucus measure would need to get 60 votes to substitute it for the House version.

Senate Minority Leader Mitch McConnell, R-Ky., who supports sending the House bill directly to President Bush's desk, was working to round up 41 votes to avoid replacing the House bill with the Baucus bill. "The Baucus proposal has become yet another Christmas tree and will only grow and slow down when it reaches the Senate floor," McConnell said. "We need to act now, and the way to do that is the bipartisan bill that passed the House by an overwhelming, bipartisan margin."

Grassley acknowledged concerns about the process dragging out. He said the Senate product was an improvement over the House's and senators should have a say in the outcome. "In other words, is a take-it-or-leave-it House bill, which passes quickly, better than a Senate bill which allows the Senate to work its will?" Grassley said.

Before his panel's markup, Baucus agreed to include energy tax breaks favored by the wind and solar power industries and pushed by Grassley and Sen. Maria Cantwell, D-Wash.

The proposals added about $5.6 billion to the package, including a one-year extension of tax credits for electricity produced from renewable resources such as wind, biomass, geothermal and solar energy. "These incentives fit the very definition of stimulus -- they are targeted and timely and will lead to tens of billions of dollars in investment and more than a hundred thousand new jobs in 2008," Cantwell said.

Minority Whip Jon Kyl, R-Ariz., criticized their inclusion, questioning their immediate impact on the economy. "How do we explain this to our constituents that this is how we're going to help them and help the economy?" asked Kyl. "We're going to allow people with higher incomes to depreciate oil and gas wells?"

Kyl argued the energy credits belong in a separate package of tax extenders left over from last year, including the research and development credit and state sales tax deduction. Kyl argued if the energy tax breaks are in the bill, then the rest of the extenders should be in as well, and for that matter, a patch for the Alternative Minimum Tax. He unsuccessfully offered an amendment to patch the AMT for another year at $64 billion, which committee leaders and the Treasury Department agree with but feared it would slow down the bill.

Homebuilders in particular would benefit from another tax break included in an amendment from Senate Budget Committee Chairman Kent Conrad, D-N.D. The measure would allow companies to carry back for five years net operating losses from tax year 2008 as well as the prior two years, as in the original bill.

That would allow homebuilders to receive refunds from their losses for most of last year, when the industry felt the brunt of the credit crunch. "The housing builders in this country, they're not in a recession; they're in a depression," Conrad said. "This is targeted right at the industry that is the hardest hit."

The panel also accepted an amendment from Sens. John Kerry, D-Mass., and Gordon Smith, R-Ore., allowing states to issue an additional $10 billion in bonds to help refinance subprime loans.

-Peter Cohn, CongressDaily

Posted at 8:53 AM
Posted to: Congress, Economy, Senate
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