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Negotiators Grappling With Stimulus Plan
Even if an agreement is reached and passed by next month, taxpayers might not see their rebate checks until June. As the Joint Committee on Taxation reported on Tuesday, the Internal Revenue Service has said that it would take at least 60 days to design and implement the program needed to make the payments, and that the processing could not start until after the tax season's peak is over, in May.
Democratic negotiators closed in on housing initiatives to be folded into the package. House Financial Services Committee Chairman Barney Frank (D-Mass.) said administration officials agreed to expand the Federal Housing Administration's ability to insure higher-priced mortgages and to help homeowners threatened by foreclosure to renegotiate their loans, without sharp increases in their payments.
The package is likely to temporarily increase the size of jumbo mortgages that can be bought by government-sponsored Fannie Mae and Freddie Mac -- from $417,000 to as high as $700,000 in high-cost housing markets. Frank said the package would also have funds for low-income heating assistance and summer-job programs for youth.
But other Democrats pressed for more. Sen. Charles E. Schumer (N.Y.) assured big-city mayors that the package would help offset a looming state and local budget crunch. "It makes no sense to give a rebate if local governments are going to have to raise taxes," he said.
Other Democrats want the federal government to assume some state costs for Medicaid or to eliminate the backlog of veterans' benefit claims by considering all the claims to be valid as the government sorts through the logjam. Sen. James Webb (D-Va.) sent a letter arguing for public works projects to create jobs, citing Washington area traffic congestion.
On the other side, some Republicans denounced the premise of the package, saying one-time tax rebates would do nothing to spur economic growth. Rep. Paul D. Ryan (Wis.), the ranking Republican on the House Budget Committee, bemoaned what he said is a move toward "a package that is good politics but not good policy." The Republican Study Group, representing House conservatives, released its own plan calling for a series of permanent corporate and capital-gains tax cuts.
Senate Republicans, in a closed-door retreat, peppered Paulson with questions about the stimulus plan. Minority Whip Jon Kyl (Ariz.) urged negotiators to slow down. "There are folks in this country that are hurting, and you want to make sure you do the best you can," he said, "but sometimes the notion that you can do something really quickly is contrary to good judgment."