- The Washington Times - Friday, January 25, 2008

The White House and House leaders yesterday agreed on a $146 billion financial stimulus package that will attempt to stave off a recession by delivering rebate checks to lower- and middle-class Americans of $300 to $600 per person, in addition to child credits of $300.

The stimulus deal also will give tax breaks to businesses and loosen limits on loan insurers Freddie Mac and Fannie Mae, in a move intended to lower interest rates for potential home buyers.

However, some Democratic senators signaled that they may halt a quick approval of the deal to fight for the inclusion of measures such as unemployment insurance and infrastructure spending.

President Bush praised the deal as a product of “the kind of cooperation that some predicted was not possible here in Washington,” and he said it “has the right set of policies and is the right size.”

“The incentives in this package will lead to higher consumer spending and increased business investment this year,” Mr. Bush told reporters at the White House.



The rebate checks are expected to begin going out in the mail or electronically by May, said Treasury Secretary Henry M. Paulson Jr.

Anyone who earned at least $3,000 in 2007 will receive a check of $300, and will receive a $300 check for each child. The individual rebate can reach up to as much as $600 per person, and $1,200 per couple, depending on income. There is no cap on the number of children for which a family can receive the $300 credit.

The rebates begin to lessen for workers making more than $75,000, or joint filers making more than $150,000. Once a single person’s income tops about $87,000 or a couple’s income is above roughly $175,000, that household is no longer eligible for any rebate or child credit. Mr. Paulson said about 117 million people will benefit.

The deal was negotiated by Mr. Paulson, House Speaker Nancy Pelosi, California Democrat, and House Minority Leader John A. Boehner, Ohio Republican. The two House leaders’ negotiating teams spent much of the week crafting the deal, reportedly reaching a deal by phone late Wednesday night.

“First and foremost, the stimulus package will put money in the hands of hardworking Americans,” Mrs. Pelosi said, adding that the bill will be brought to the House floor for a vote “at the earliest date … so that those rebate checks can be in the mail.”

The House is in recess until Monday.

Mr. Bush urged Congress “to enact this economic growth agreement into law as soon as possible,” but some Democratic senators voiced their intent to add some extra provisions to the package.

Senate Majority Leader Harry Reid, Nevada Democrat, said he expected senators to add “funds for other initiatives that can boost the economy immediately, such as unemployment benefits, nutrition assistance, state relief and infrastructure investment.”

Sen. Edward M. Kennedy, Massachusetts Democrat, said that “working families should be assured that this agreement is not the final word.”

“Families are in crisis, and it’s not enough just to help with their taxes. I intend to offer amendments in the Senate to strengthen this package — to provide unemployment insurance to workers looking for jobs, and to help families coping with high heating costs and skyrocketing food prices,” Mr. Kennedy said.

The agreement by House Democrats to drop demands for unemployment insurance, food stamps, infrastructure spending and other measures, along with concessions by the White House and Republicans on how to distribute the rebate and other issues, allowed the deal to be reached.

Democratic aides said greater Republican flexibility over giving relief to poor families with children — who would not have been eligible under Mr. Bush’s original tax-rebate proposal — was the catalyst that moved the talks forward.

Mr. Boehner said, “The speaker and I could stand here for an hour and talk about the things that are not in this package. We had members from both sides of the aisle that had an endless list of items that they want to include in this. And the beauty of this package is that it is simple, it is clean, it is neat, and it will get the money back out into the American economy as quickly as possible.”

Mr. Paulson, asked about Mr. Reid’s comments, said the stimulus package “could easily look like a Christmas tree.”

“What we need is we need something that’s going to be quick and be effective,” Mr. Paulson told reporters at the White House. “Again, I don’t know what [Mr. Reid] has in mind, but almost every spending program I’ve looked at, every infrastructure spending, doesn’t meet the test of making a difference quickly.”

Mr. Reid said he still anticipated meeting his goal of passing the measure before Congress recesses Feb. 15 for a weeklong Presidents Day break.

The business tax break would allow companies to more quickly claim depreciation for capital investments, such as machinery and other property. The larger tax deduction is expected to spur business spending and boost employment.

On the issue of relaxing loan insurer limits, Mr. Paulson got steamrolled in talks, reluctantly agreeing to let Fannie Mae and Freddie Mac buy mortgages as high as $729,750, he said. Mr. Paulson “didn’t support” raising the loan limit from $417,000 without tougher regulations on the two huge government-sponsored corporations.

But Mr. Paulson said that during talks he “got run down by a bipartisan steamroller.”

“Republicans and Democrats were united” on raising the loan limit, he said.

ECONOMIC STIMULUS

Congressional leaders have reached a deal with the White house on a bipartisan economic stimulus package that is expected to move swiftly through Congress and give most tax filers rebates of $600 to $1,200.

WHAT’S IN c Tax rebates: Checks of at least $300 for almost everyone earning a paycheck, including low-income earners who make too little to pay income taxes, so long as they earned at least $3,000 in 2007. Families with children would receive an additional $300 per child, while those paying income taxes could receive higher rebates. The full rebate would be limited to individuals earning $75,000 or less and couples with incomes of $150,000 or less, but a partial rebate would go to individuals earning up to $87,000 and couples earning up to $174,000. The caps are higher for people with children.

• Business tax write-offs: Spurring business investments with so-called bonus depreciation and more generous expensing rules.

• Housing rescue: Allow more subprime mortgage holders to refinance into federally insured loans by raising the limit on Federal Housing Administration loans from $362,000 to as high as $729,750 in expensive areas. Increase the availability of mortgages by providing a one-year boost to the cap on loans that Fannie Mae and Freddie Mac can buy, from $417,000 up to $729,750 in high-cost markets.

WHAT’S OUT c Permanent tax cuts: Republicans conceded that their top priority would have to be left out.

• Unemployment insurance: Democrats wanted to extend benefits past 26 weeks.

• Food stamps: A boost for benefits.

• Medicaid: Democrats gave up on including Medicaid payments to states.

• Low-income heating subsidies: Democrats are surrendering the fight to include them.

• Infrastructure spending: Spending on transportation or repair projects already under way is off the table.

• Republicans’ proposal to allow businesses suffering losses now to reclaim taxes previously paid was dropped.

Source: Associated Press

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