The Wall Street Journal-20080129-Baucus Stimulus Plan May Spur Conflict
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Baucus Stimulus Plan May Spur Conflict
Full Text (700 words)WASHINGTON -- The Senate's top tax writer unveiled an economic- stimulus plan that diverges from a bipartisan deal negotiated last week by the House and the Bush administration, setting up a potential conflict as leaders race to complete action on the legislation by midmonth.
Under a plan to provide millions of Americans with tax rebates, Sen. Max Baucus (D., Mont.), chairman of the Senate tax panel, wouldn't exclude wealthier taxpayers. That could prove a major sticking point with the House, where Democrats won a deal to set an income limit on tax rebates in tough talks with Republicans. In the Senate, where Democrats hold a slim majority, leaving out such a limit could be important in attracting Republican support.
Sen. Baucus proposed a $500 rebate for people who report at least $3,000 of income on a 2007 tax return, including Social Security income, as well as wages, a move that would provide rebates to millions of seniors not eligible under the House compromise. Married couples would be eligible to receive $1,000. He also revived a top Democratic priority -- an extension of unemployment-insurance benefits -- that was dropped from the House plan.
Congressional leaders said they were optimistic the differences would be worked out quickly. So far President Bush has said only that the Senate shouldn't delay or derail a bill. He has urged Congress not to add new spending on programs such as unemployment insurance but hasn't threatened a veto.
The Senate plan, up for debate tomorrow in the Finance Committee, is estimated to cost $156 billion, not far from the roughly $150 billion the House leaders said their bill would cost and that President Bush has backed. There are other similarities: Both the House and Senate plans include tax rebates for millions of people and incentives for businesses to invest in new plants and equipment.
The Senate is expected to retain proposed increases in loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration that are part of the House plan. But Democratic aides said other provisions of a bill modernizing the FHA and allowing more homeowners to refinance out of costly subprime loans would now move on a slower track. They were dropped from the House agreement in recent days, after resistance from administration officials.
The House is expected to pass its stimulus bill today. Congressional leaders have vowed to send a bill to President Bush by Feb. 15. Any differences between the chambers would have to be settled before then. The political risks to both sides of the effort backfiring are huge, with many people already counting on getting rebate checks this spring.
The House bill would provide rebates of $300 to $1,200 to an estimated 117 million people, including millions of people with incomes too low to pay income taxes. Wealthier people wouldn't be eligible for rebates under the House bill; rebates would start phasing out for individuals with incomes greater than $75,000 and married couples with incomes greater than $150,000.
Mr. Baucus backs a business incentive not included in the House bill, which would allow companies with operating losses in 2006 and 2007 to apply them to past tax years, as far back as 2001, in order to receive a refund. On unemployment insurance, Mr. Baucus is proposing a 13-week extension nationwide for this year, plus an additional 13 weeks of benefits for people in states with unemployment rates of 6% or higher.
Democrats, including Mr. Baucus, played down the differences between the House and Senate plans and said legislation would be finished quickly. "The White House says we mustn't slow the economic stimulus agreement down, or blow it up. I agree," Mr. Baucus said in a statement.
Mr. Baucus said his plan, by taking into account Social Security income, would provide seniors "the same rebate as any wage earner." To get a rebate, people would have to file tax returns ths year.
The AARP, an advocacy group for retired people, has pushed for the elderly to be included. But "it's going to be hard to get people to take advantage of it," said David Certner of AARP, if they don't normally file tax returns.
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Stephen Power contributed to this article.
