Stimulus plan for US not a done deal yet
House passes compromise plan to revive economy but Senate go-ahead will be harder to get.
A MULTI-BILLION-DOLLAR economic stimulus package for the troubled US economy faces an uncertain future despite being easily passed by the House of Representatives.
The Bill now goes to the Senate, where Democrats are forging ahead with a more expensive plan that could delay final action on the stimulus package.
The unusually swift and bipartisan 385-35 vote on Tuesday on the compromise US$146 billion (S$212 billion) plan reached between the Bush administration and House leaders underscored deep-seated concerns among lawmakers that the world’s largest economy might be heading into a recession unless taxes are cut.
President George W. Bush, who prodded Congress during his State of the Union speech on Monday to act decisively, has urged the Senate not to meddle with the Bill amid fears that it could take months to implement.
“This is a very good start,” he said, referring to the overwhelming vote in the House.
“The temptation is going to be for the Senate to load it up. My concern is that we need to get this Bill out of the Senate and on my desk so that the cheques can get in the hands of our consumers, and our businesses can…be assured of the incentives necessary to make investments.”
House Speaker Nancy Pelosi, who was instrumental in sealing an agreement that involved both the Democrats and Republicans surrendering proposals, said that the Senate should “take this Bill and run with it”.
Under the House stimulus plan, most workers would receive US$600 from the government – with married couples receiving US$1,200, plus US$300 per child. Eligibility for the full payment would be capped at US$75,000 in adjusted gross income for individuals and US$150,000 for couples.
Workers with at least US$3,000 in income last year, who earned too little to pay taxes, would receive US$300, plus US$300 per child.
Businesses would receive US$45 billion in tax incentives to invest in new plants and equipment.
The Senate appears divided over whether to accept the House plan or to press forward with its own. Its Finance Committee package, which would cost US$150.5 billion over 10 years, would reduce most of the tax cheques to US$500 per person but would offer them to virtually everyone, including low-income seniors and the affluent.
Senate Finance Committee chairman Max Baucus, who authored the proposal, disclosed that it would provide US$500 to some 20 million Americans over the age of 62 who live only on Social Security benefits.
The Senate measure would also restore a business tax break dropped during the House negotiations that would permit corporations suffering losses now to reclaim taxes previously paid.
Mr Baucus said his committee was to consider the plan yesterday. He said the new effort would not lead to a delay in passage of a plan.
Some lawmakers have criticised both plans, saying they might create more government debt without benefiting the economy.
“Just taking a large amount of cash and putting it on the table for people…may not stimulate our economy,” Republican Senator Judd Gregg said on the Senate floor.
“If somebody goes out with their US$600 rebate and they buy a television made in China, or they buy an iPod made in Vietnam…if the product isn’t actually physically produced here, you are not stimulating our economy, you are stimulating the economy where the product is produced.”
But the consensus is that tax breaks should provide at least a short-term lift to a faltering economy.
“The argument has been made that this is just a short-term fix, and that is what we hope it will be,” said Republican Barney Frank, chairman of the House Financial Services Committee. Rather than pushing people to spend more, he said, “it is to help them not to spend less”.