The New York Times reports:
House leaders and the White House on Thursday announced a tentative agreement on an economic stimulus package of roughly $150 billion that would pay stipends of $300 to $1,200 per family, and more for families with children, plus provide tax incentives for businesses to encourage spending.
The accord was announced by Speaker Nancy Pelosi of California, the Republican leader, Representative John A. Boehner of Ohio, and Treasury Secretary Henry M. Paulson Jr. at a Capitol news conference and hailed minutes afterward by President Bush as the fruit of “patience, determination and good will” in both parties.
The president and the speaker both described the accord as embracing the basic precepts of their respective parties. Mr. Bush called it “a powerful and effective way to help taxpayers and businesses” by letting people keep and spend more of their own money.
Ms. Pelosi said the package is aimed at the middle class “and to those who aspire to be in the middle class.” She described it as “timely, targeted and temporary — that was our standard.”
In addition to the tax rebates, or stipends, Ms. Pelosi said the package would offer some quick relief for those homeowners in danger of losing their houses.
Mr. Boehner called the package “simple, clean and neat.” Like Ms. Pelosi, he said none of the parties to the talks got everything they wanted. But in the end, he said, “This agreement is a big win for the American people.”
President Bush said the agreement was also a victory for the kind of bipartisanship that some politicians and analysts say is in short supply in Washington of late. And as he has many times, the president said the American economy is “structurally sound” despite rising energy prices and problems in the housing industry.
Democrats released a summary estimating that the rebates would go to 117 million families. About two-thirds of the total package would go toward the rebates, with the remaining one-third going toward business tax breaks, like write-offs for equipment purchases.
Both leaders pledged quick action in the House, and both pointedly urged similar alacrity by the Senate, whose members operate “with their very senatorial rules,” as Ms. Pelosi put it.
“Speed is of the essence,” Mr. Paulson said.
President Bush underscored that message, as he offered warm praise for the negotiators in both parties. He also took the opportunity to urge once again the extension of tax cuts that were approved by the Republican-controlled Congress early in the decade and are to expire within a few years.
Senator Harry Reid of Nevada, the Democratic majority leader, said minutes after the announcement that he was pleased an agreement had been reached, and that he wanted a package ready for Mr. Bush by the time Congress recesses around President’s Day. But he said senators would “work to improve the House package” through the addition of unemployment benefits and other items.
Late in the negotiations that preceded Thursday’s breakthrough, Ms. Pelosi agreed not to include two proposals that had broad support among Congressional Democrats: an extension of unemployment benefits and a temporary increase in food stamps.
In exchange for those concessions, the Bush administration and House Republicans agreed that the stipend of at least $300 would be paid to all workers who earned at least $3,000 last year, even those who did not earn enough to pay taxes.
As it was presented on Thursday afternoon, the package calls for workers who paid income taxes to receive $300 to $600, and couples to receive up to $1,200 — plus $300 more for each child. The stipend, which some lawmakers were calling a “tax rebate,” would be subject to income limits so that the wealthiest taxpayers would not receive it. Payments would go to individuals earning up to $75,000 and couples earning up to $150,000. He said roughly two-thirds of the overall package would be aimed at individual taxpayers and one-third at businesses.
Senators Reid and Mitch McConnell of Kentucky, the Republican minority leader, have yet to give their approval to the accord. But, while there may be some wrinkles to iron out between the House and Senate, there was nothing to suggest any disagreement so severe as to be a potential deal breaker.
Republicans immediately cheered the deal as “tilted toward taxpayers” and avoiding “extraneous spending” on unemployment benefits, food stamps, or infrastructure projects, which some Democrats had said should be included in a stimulus package.
But it was unclear how the package, without extended unemployment benefits or increased food stamps, would be received by Democrats in the Senate, including Senator Edward M. Kennedy of Massachusetts and Senator Charles E. Schumer of New York, who have said that those proposals offered the best prospects for quickly injecting added spending into the economy.
Senator Max Baucus, the Montana Democrat who is chairman of the Finance Committee, reiterated his interest in extending unemployment benefits at a hearing on Thursday morning, where he said his committee would mark up a fiscal stimulus bill next week.
“There are reports that a deal may be close on the House side,” Mr. Baucus said. “The Senate will want to speak, as well.”
That announcement of potential action by the Finance Committee could jar Democratic leaders who have been striving for a carefully coordinated effort on the economy. Earlier this week, Mr. Reid announced that the House would take the lead in developing the stimulus package and would conduct the immediate negotiations with the White House and Congressional Republicans.
Noting that tax rebates were one potentially cost-effective method to spur new spending, Mr. Baucus said: “Another example would be expanding unemployment insurance benefits. In recent recessions, Congress has extended the number of weeks that unemployed workers could receive benefits. We could do that again. We could provide a further extension for recipients in high unemployment states. And we could also temporarily increase the dollar amount of benefits to help unemployed workers to pay their bills.”
“Unfortunately, under current law, fewer than 4 in 10 unemployed workers receive unemployment insurance benefits,” Mr. Baucus continued. “To address this problem, we could extend eligibility. For example, we could extend benefits to part-time workers.”
Mr. Schumer, at the same hearing, also lamented Ms. Pelosi’s concession on unemployment benefits, but said he hoped that cooperation on a quick stimulus plan would continue. “While I may not agree with every element of the package — such as the decision to leave out extended unemployment benefits, which economists say would give us the greatest bang for the buck — there are some very positive developments around the tax rebate for families,” he said. “I encourage everyone to keep working in a bipartisan way.”
Ms. Pelosi met three times on Wednesday with Treasury Secretary Paulson and Mr. Boehner, who have served as chief architects of the plan in a rare show of bipartisanship.
On her way into a meeting Wednesday evening, Ms. Pelosi signaled that a deal might be close when she said there had been “tremendous” progress during the day.
Democratic leaders said that to speed the economic rescue package they would mostly bypass the usual committee process. Lawmakers said that they hoped the plan could be approved by mid-February and that it would be sufficient to soften an economic downturn and forestall a recession.
“One of the principal tenets of the administration and of ourselves is we have got to do this fast,” Representative Steny H. Hoyer of Maryland, the majority leader, said Wednesday. “To go through the regular process and have hearings and have mark-ups and subcommittee mark-ups, obviously we would be to some degree twiddling our thumbs while the economy burns.”
The progress toward a stimulus plan came as the Congressional Budget Office revised its economic projections to give a gloomier assessment of the economy, including a widening budget deficit and the first decline in corporate tax revenue since 2003.
The grimmer outlook prompted Senator Kent Conrad of North Dakota, chairman of the Budget Committee, to declare that a short-term stimulus package was insufficient.
“In addition to developing a bipartisan stimulus package,” Mr. Conrad said, “we also must work together to tackle the long-term fiscal challenges we face with the coming retirement of the baby boom generation. The American people rightly expect that we will come together to address these two significant challenges.”
House conservatives raised alarms about the emerging economic legislation, saying they feared it would focus too much on tax rebates and not enough on tax incentives to encourage businesses to create jobs.
They said any package should include provisions that would reduce the corporate tax rate, adjust capital gains for inflation and lower the capital gains rate for corporations.
“Giving temporary tax rebate checks to families, as important as that is, is not the same as economic growth,” said Representative Jeb Hensarling of Texas, chairman of the Republican Study Committee. “If you’re going to have an economic stimulus package, it ought to contain some economic stimulus.”
Thursday, January 24, 2008
The New York Times reports: