Stimulus bill hits Senate this week
A bipartisan accord in the House calls for a $150 billion spending plan, including significant tax rebates. But senators may want add-ons.
from the January 28, 2008 edition
Page 3 of 3
The Senate Finance Committee begins marking up its own version of a stimulus plan this week. The panel, typically one of the most bipartisan in the Senate, will consider extending unemployment insurance, increasing funding for food stamps, heating assistance for the poor, rebate checks for low-income retirees, and more tax breaks for business.
"I believe, and I think many senators agree, that we can do even more to stimulate America's economy," said chairman Max Baucus (D) of Montana in a statement.
But he added that he would work with Treasury Secretary Paulson, House leaders, and the White House "to agree on any new provisions."
Quick implementation is key
Meanwhile, interest groups all over Washington are ramping up to influence the endgame deliberations on the plan. A main selling point is how fast competing stimulus plans could get cash into the economy.
Secretary Paulson said that if all works well, the Internal Revenue Service could begin moving rebate checks to some 117 million people in May.
"The Social Security Administration could get seniors a stimulus check in six weeks – a faster implementation than the IRS would be able to deliver," said Barbara Kennelly, president and CEO of the National Committee to Preserve Social Security and Medicare, a nonprofit advocacy group for seniors.
Unions say extended unemployment insurance could have an impact on the economy and consumer spending even sooner. "It's extremely likely that there will be provisions [in the Senate bill] extending unemployment insurance either in this stimulus plan or in one to follow quickly," says Bill Samuel, director of government affairs for the AFL-CIO. "We don't think that the Senate will allow 200,000 jobless workers a month to run out of benefits – and that number is going to increase."
A similar tax-rebate plan in 2002 took about 10 weeks to finish distributing $38 billion in stimulus payments. If it takes that long again, much of recipients' spending will take place in the summer.
The tax cut could add about 0.8 percent to the economy's growth rate in the second quarter and 0.25 percent in the next quarter, estimates economist Drew Matus of Lehman Brothers.
"If it's targeted to the right people, it could be enough to reduce the risk of recession, particularly in the light of Fed action," says Mr. Matus.
[Editor's note: An earlier version of this story was posted Thursday, January 24.]
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