Partisan bickering leaves tax rebate, economic stimulus in jeopardy

At the end of January, the House voted 385 to 35 to approve an estimated $146 billion stimulus package aimed at countering a slowdown in economic growth. However, one week later, Senate Republicans put the fate of $600-$1,200 rebate checks for more than 100 million Americans in limbo when they blocked the bid by Democrats to add $44 billion in help for the elderly, disabled veterans, the unemployed, and businesses.

GOP senators banded together Feb. 6 to prevent the now $205 billion plan in a 58-41 vote that ended debate on the Senate measure – leaving it just short of the 60 votes needed to move the bill to a final vote.

Democrats are now left with the choice to either accept a House bill that they have been quoted to say is inadequate or risk being blamed for delaying a measure designed to give a quick boost to a lagging economy.

With the add-ons, the two bills from the House and Senate differ in many ways. The House bill calls for one-time tax rebates to go primarily to individuals making less than $75,000 and to married couples making less than $150,000. It would also provide temporary tax breaks for businesses that would let them deduct more of their investments in plants and equipment more quickly. And the bill contains two measures aimed at helping homeowners get or refinance mortgages.

The Senate bill differs from the House plan in consideration of who should get the rebates; should rebates go to unemployed workers; and how many tax breaks should businesses get. The Senate proposal, if passed, would offer rebates to seniors whose primary income comes from Social Security; the House bill only gives rebates to households with earned income.

The Senate proposal will also eliminate income caps on who would qualify for a rebate, giving checks to all tax filers, not just low- and middle-income households targeted by the House plan. This means that under the Senate plan, most tax filers would receive slightly less than they would under the House plan.

Under the plan from the House, the unemployed are not mentioned. The Senate wants to extend unemployment benefits for an additional 13 weeks for those whose benefits have run out, with 13 more weeks available in states with the highest jobless rates.

The White House has carefully avoided issuing threats about the package, despite President Bush’s opposition to the add-ons, and has urged the Senate to move fast to approve a stimulus plan.

"To be effective, this economic growth package must be timely, so it is crucial that the Senate now move quickly to pass a bill that will deliver relief to our economy," White House Press Secretary Dana Perino said in a statement after the vote.

The Senate dispute has slowed down the stimulus measure, but there is no indication that it will delay rebate check delivery, which are expected to begin arriving in May. The rebates will be based on 2007 tax returns, which aren’t due until April 15.

Related stories:

  • Congress passes stimulus bill, including tax rebate

  • Survey results: Americans unsure how they will spend rebate checks

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