House, Bush stimulus deal on fast track
Democrats and Republicans are anxious to get $300 to $1,200 in tax-rebate checks to wage earners by spring.
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The deal worked out by bipartisan House leaders and Treasury Secretary Henry Paulson represents significant compromises across the board for a Congress typically in gridlock – with all sides dropping elements seen as derailing the plan.The plan is on a fast track on Capitol Hill, where leaders on both sides of the aisle are promising quick action.Skip to next paragraph
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Republicans agreed to recalibrate the program to include more lower-income
families, while Democrats gave up cherished spending programs. Democrats also urged and won relief for families caught up in the subprime mortgage debacle and expanded the plan to include wage-earning households that do not file income taxes.
Republicans claimed credit for including tax relief for employers, including a 50 percent bonus deduction on new equipment, and for holding the line on extraneous spending and tax hikes.
"I can't say I'm totally pleased with the package," said Speaker Nancy Pelosi in a briefing announcing the deal on Thursday.
"Let us praise this for what it does and not disrespect it for what it does not: It is timely targeted and temporary, and it was done in record time since our conversation with the president [on Tuesday]," she added.
Meanwhile, Senate leaders say they will give the House plan prompt but thorough consideration. "When it comes over here, we're going to take another look at it," said Senate majority leader Harry Reid. He says that he expects votes on elements that dropped out of the House version of the stimulus plan, including extended unemployment benefits.
"Every dollar spent on unemployment insurance produces $1.87 in additional spending, whereas tax rebates produce only $1.17," says Sen. Charles Schumer (D) of New York, who chairs the Joint Economic Committee.
Sen. Patty Murray (D) of Washington is urging a summer youth program and infrastructure projects to create jobs.
But even strong objections to the proposed plan are taking a back seat to the sense of urgency on Capitol Hill to be seen as as doing something on a front-burner issue.
"I'm not enthusiastic about rebates for people who don't pay income taxes, but if that's what it takes to get a bipartisan compromise, I'll probably support it," said Sen. Chuck Grassley (R) of Iowa, the ranking Republican on the Senate Finance Committee. "I'm not taking anything off the table."
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 March, April, and May. 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.