By Jonathan Weisman
Washington Post Staff Writer
Tuesday, January 29, 2008
The chairman of the Senate Finance Committee yesterday unveiled a rival plan to stimulate the economy, offering a $500 check to virtually every American -- including low-income seniors and rich financiers -- in a direct challenge to the bipartisan deal reached last week by President Bush and House leaders.
The $156 billion measure by Sen. Max Baucus (D-Mont.), which will be drafted by the committee tomorrow, also would extend unemployment benefits for the long-term jobless by 13 weeks, a proposal that had been rejected by Bush and House Republican leaders as they crafted their $150 billion stimulus package.
That delicate compromise, unveiled last week, proposed to cap eligibility for somewhat larger tax rebates at $75,000 for individuals and $150,000 for couples.
With the strong backing of Senate Majority Leader Harry M. Reid (D-Nev.), the package that emerges from the Finance Committee is likely to pass the Senate, forcing House-Senate negotiations that Bush and House leaders had hoped to avoid. The House is expected to approve its stimulus plan today.
"Rebates for seniors and payroll taxpayers, extended unemployment insurance and tax relief for struggling businesses will put more cash into the American economy right away," Baucus said. "The White House says we mustn't slow the economic stimulus agreement down, or blow it up. I agree. We're going to improve it and get it passed right away."
Baucus's proposal is only the start of revisions. Senators have promised to add heating assistance for the poor, food-stamp money, more business tax incentives and road-resurfacing funds, among other items.
"This is a package in sync with the House bill but stronger and broader," said Sen. Charles E. Schumer (N.Y.), a member of the Democratic leadership. "Once the package gets to the floor, I will make an effort to add $500 million of emergency foreclosure-prevention funding. The housing crisis is at the heart of the economic slowdown, and more must be done about it."
House Democratic and Republican leaders largely held their tongues, refusing to speculate on how much the Senate's efforts could slow down their efforts to fast-track the stimulus plan. "Everything that I've heard coming out of the Senate seems to be timely, temporary and targeted," said House Speaker Nancy Pelosi (D-Calif.).
But privately, House leaders were fuming. In difficult negotiations last week, they extracted the income caps as a key concession, allowing them to secure rebates for workers who earn too little money to pay income tax and to set rebate checks for middle-income workers at $600 for individuals and $1,200 per couple.
In his State of the Union address last night, Bush said that "the temptation will be to load up the bill" and that "this would delay it or derail it, and neither option is acceptable."
House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) said last night that Baucus and the Senate were on "thin ice" with the new plan. "By eliminating the income cap, we would only further grow the divide between rich and poor that has already grown so much under President Bush's tax policies," Rangel said. "I am concerned that this expansion would jeopardize the entire stimulus package."
Baucus's proposal would actually increase the size of payments to the poorest workers, to $500 from the House's $300, and would include poor seniors by extending eligibility to anyone who receives $3,000 in Social Security income. But middle-income taxpayers would pay a price, losing $100 in payments to individuals or $200 in payments to couples. Almost all taxpayers would still receive $300 per child younger than 17.
Baucus said he eliminated the income cap to simplify the rebate structure. House Democratic leadership aides grumbled that Baucus was watching out for the interests of the rich, as they said he did in Bush's first term, when he helped shepherd President Bush's tax cuts through Congress.
Besides shrinking the size of some payments, the Finance Committee also would save money by slightly decreasing the incentives for business investment. But House leaders and tax writers were skeptical yesterday that the Baucus plan could offer all those measures for the $156 billion price tag he put on his bill.
"I don't buy it," said House Democratic Caucus Chairman Rahm Emanuel (Ill.), who helped negotiate the House package.
The cost of either plan would be tacked onto this year's federal budget deficit, and if the price tag rises much higher, House leaders fear, a veto will follow.
To keep the package on a fast track, Reid plans to put the House-approved bill onto the Senate floor, then allow Baucus to replace it with the Finance Committee version. That could take 60 votes, to break a filibuster by proponents of the House-White House compromise.
"Every economist and expert is saying the same thing: In order for stimulus to be effective, we have to get the money into American taxpayers' pockets as quickly as possible," said Kevin Smith, a spokesman for House Minority Leader John A. Boehner (R-Ohio).
But senators from both parties have expressed determination to alter the House package.
Sen. Jim DeMint (R-S.C.), an uncompromising conservative, said yesterday that he will try to add a provision making the president's first-term tax cuts permanent. They are now set to expire in 2011.
"Everyone is in a hurry to pass something quickly, but we need to make sure that it actually works," DeMint said. "We're not going to grow our economy with temporary cash handouts."