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House leaders completed negotiations on January 24, 2008, with President George W. Bush's administration over a $150 billion package of economic stimulus provisions that they believe will prevent the economy from heading into a recession. At a Capitol Hill briefing, House Speaker Nancy Pelosi (D-Cal.) and House Minority Leader John Boehner (R-Ohio) were joined by Treasury Secretary Henry M. Paulson to announce details of the package that would give tax rebates and child tax credits to millions of American families, and tax relief to businesses. Lawmakers hope that the bipartisan proposal will reach the president's desk by mid-February.
According to details from Paulson and Pelosi, single taxpayers with earned income of at least $3,000 will get a tax rebate check of at least $300, while married taxpayers would get double that amount. Single taxpayers with income up to $75,000, and married taxpayers with incomes up to $150,000 will see rebate checks of up to $600 and $1,200, respectively. Taxpayers with incomes above those levels will see benefits phase-out at 5 percent for each additional $1,000 in earnings. In addition, the package includes a child tax credit of $300 per child. The tax rebates will go to approximately 117 million Americans.
Speaker Pelosi credited Paulson's patience in working to reach an agreement that both House Democrats and Republicans can support. While not totally satisfied with the stimulus package, Pelosi hinted that House lawmakers might pursue additional measures if the economy worsens. "I've always said that what we needed to do is to put money in the hands of those who will spend it right away to inject demand into the economy, to help create jobs, to help turn around the economy," Pelosi said.
Minority Leader Boehner said both he and Pelosi had to give up some of their preferred stimulus proposals in order to reach an agreement that both parties could accept. "But I think it's a good compromise that will benefit the American people," he said. Boehner said he hopes for quick action in the House, followed by swift work in the Senate in order to get money in the hands of middle-income Americans.
The Ohio congressman added that members from both parties had an endless list of items they wanted in the stimulus package, but the administration and House leaders agreed on a proposal that was simple, clean and neat. He also said he thought there was "broad bipartisan support for this bill on the floor of the House."
The cost of the rebate checks and child tax credit is estimated at $103 billion. For businesses, the stimulus package would provide a 50 percent bonus deduction on new equipment in the year that it is placed in service. The approximate cost would be $42.3 billion for 2008. It would also allow employers to fully expense $250,000 in both new and used tangible property in the year it is purchased. The cost would be $1 billion.
Senate Democratic leaders praised the focus of the House agreement with the White House, citing the targeted tax rebates aimed at middle class families, but they also termed the package incomplete, announcing their intention to add more spending measures, which could delay or endanger passage of the bipartisan stimulus measure.
Senate Majority Leader Harry Reid (D-Nev.) said the Highway Trust Fund is facing a $500 billion shortfall and that directing funds for infrastructure improvements, such as highway resurfacing, was the most expedient way to stimulate the economy due to the number of new jobs it would create. Democrats also want to extend unemployment benefits, with the backing of some Senate Republicans, according to Reid, and to provide funding for food stamps, an idea favored by Senate Finance Committee Ranking Member Charles E. Grassley (R-Iowa). Some Democrats want more funding for summer youth employment programs. Mortgage relief in the form of raising loan limits for Fannie Mae, Freddie Mac and mortgages insured by the Federal Housing Administration is also on the table, as are tax breaks for small businesses.
"I expect that the (Finance) Committee and other senators will work to improve the House package by adding funds for other initiatives that can boost the economy immediately, such as unemployment benefits, nutrition assistance, state relief, and infrastructure investment," said Reid. Senate Finance Committee Chairman Max Baucus (D-Mont.) announced that his committee plans on marking up its own economic stimulus package, independent of House legislation.
President Bush said the stimulus package meets his principles for boosting the economy. In a brief statement at the White House on January 24, Bush praised the agreement for containing "an effective, robust and temporary set of incentives" to encourage consumer spending and business investment.
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- Related items:
- Economic Stimulus Plan: How Might It Work?
- Tax Round-Up: A Look Ahead to Changes in 2008
Posted February 5, 2008.
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