CLT UPDATE
Monday, January 28, 2008
Gov't admits over-taxation is
killing the economy
As President Bush laid out his vision for an economic
stimulus that could reach $150 billion, Democrats in Congress and the
administration diverged about how to spread around its benefits....
The White House wants tax cuts to help a wide range of individuals and
businesses. Privately, it has floated a plan that focuses on rebates of
up to $800 for individuals and $1,600 for married couples.
In addition to tax cuts, congressional Democrats say they also want
spending targeted at specific groups such as the unemployed. They have
also discussed denying rebates to taxpayers who earn more than $85,000
and offering them to those who don't pay income taxes at all....
"This growth package must be built on broad-based tax relief that will
directly affect economic growth, and not the kind of spending projects
that would have little immediate impact on our economy," Mr. Bush said
at the White House on Friday morning, in a warning shot for
Democrats....
Multiple studies say those most likely to spend rebate checks are low-
and middle-income households with less access to credit. That boosts
Democratic arguments that the rebates should be made available even to
those who don't pay taxes....
But millions of lower-income workers pay no federal income tax because
existing breaks wipe out their exposure. ... Conservatives question the
fairness of giving rebates to people who paid no income tax.
The Wall Street Journal
Saturday, January 19, 2008
Bush, Democrats Spar on Stimulus
Drive for Deal Remains
Strong, but Sides Differ
On Who Gets Tax Relief
Congressional leaders announced a deal with the White House
Thursday on an economic stimulus package that would give most tax filers refunds
of $600 to $1,200, and more if they have children.
House Speaker Nancy Pelosi said Congress would act on the agreement -- hammered
out in a week of intense negotiations and uncustomary bipartisanship -- "at the
earliest date, so that those rebate checks can be in the mail." ...
The rebates, which would go to about 116 million families, had appeal for both
Democrats and Republicans. Pelosi's staff noted that they would include $28
billion in checks to 35 million working families who wouldn't have been helped
by Bush's original proposal. Republicans, for their part, were pleased that the
bulk of the rebates -- more than 70 percent, according to an analysis by
Congress' Joint Tax Committee -- would go to individuals who pay taxes....
Bush has supported larger rebates of $800-$1,600, but his plan would have left
out 30 million working households who earn paychecks but don't make enough to
pay income tax ...
Associated Press
Thursday, January 24, 2008
Tax rebates deal announced
The Bush administration is calling for temporary tax relief
worth about $140 billion, reportedly in the form of tax-rebate checks of up to
$800 per taxpayer....
The idea behind these plans is to get money into the hands of consumers who will
spend it quickly, thereby revving up demand and "stimulating" the economy back
to good health. There's just one problem: There ain't no such thing as a free
lunch....
But where did that $800 come from in the first place? Does the federal
government have a warehouse full of surplus money it can spread around when
recession clouds appear on the horizon? Of course not. Washington already spends
more money than it has; just three months into the new fiscal year, the budget
deficit is up to $107 billion. And since no one is proposing to pay for a
stimulus package by curtailing other spending, the only way Uncle Sam is going
to come up with your $800 is to borrow it.
In other words, before any money can be injected into the economy by means of
rebate checks or other benefits, it must first be extracted from the economy by
means of borrowing (or taxation)....
The engine of economic growth is creating new wealth, not redistributing
existing wealth. Rebating some of last year's taxes or expanding welfare-like
benefits won't encourage anyone to be more productive. Permanently lowering tax
rates - letting Americans keep more of the money they earn - will.
True, tax cuts instead of tax rebates would mean no kiss in the mail. Most
politicians would rather treat you to a free lunch than stimulate you to work,
invest, and take more risks. Just remember one thing about that free lunch:
There ain't no such thing.
The Boston Globe
Wednesday, January 23, 2008
Remember, there's no free lunch
By Jeff Jacoby
Retirees living off Social Security are frustrated that they
won’t get tax rebate checks through a bipartisan economic stimulus package
before the House. Senate Democrats Friday began efforts to include them....
Bush urged Congress on Friday to quickly pass the package without any further
spending. "I strongly believe it would be a mistake to delay or derail this
bill," Bush said....
Senate Democrats are refusing to rubber stamp the House measure. That raises the
possibility of protracted negotiations if Democrats are successful in adding
giving retirees tax rebates, extending unemployment benefits, boosting heating
subsidies for the poor and temporarily increasing food stamp payments....
But it would leave out about 20 million senior citizens living chiefly on Social
Security. They wouldn’t get rebate checks unless they have at least $3,000
earned income or pay income taxes based on other sources such as earnings,
interest, investments or private pension plans.
"Less than half of all Americans 65 and older would get it," said AARP spokesman
Jim Dau.
Associated Press
Saturday, January 26, 2008
Senate Democrats mull adding retirees
to rebate plan, extending jobless benefits
President Bush’s chief negotiator on an economic aid deal
said Sunday the Senate should quickly get behind a plan or risk drawing the
resentment of a frustrated public.
The president and House leaders have agreed on a proposal to provide tax rebate
checks to 117 million families and give businesses $50 billion in incentives to
invest in new plants and equipment. The goal is to help head off a recession and
boost consumer confidence.
"I don’t think the Senate is going to want to derail that deal," Treasury
Secretary Henry Paulson said. "And I don’t think the American people are going
to have much patience for anything that would slow down the process." ...
The Senate is considering adding such elements as extending unemployment
benefits for workers whose benefits have run out, boosting home heating
subsidies, raising food stamp benefits and approving money for public works
projects.
Associated Press
Sunday, January 27, 2008
Treasury secretary pushes Senate to act
on economic package
Chip Ford's CLT Commentary
At last the federal government has come to recognize
that over-taxation has become a serious problem. Taking too much
of our money has reached the point where it's bringing on a recession.
Neither the Bush administration nor the U.S. Congress has publicly
admitted it, but why else would the government be rushing to send
taxpayers a quick rebate to "stimulate" the economy -- if it hadn't
taken too much from us, enough to put the brakes on consumer spending?
In the throes of panic in an election year,
politicians have finally found a bipartisan issue on which they can
agree: Republicans and Democrats alike don't want to run for
reelection in the midst of a recession, whatever the cost.
But instead of reducing the tax burden permanently,
they'd prefer to send each taxpayer a one-time check-in-the-mail, put
the windfall in your hand personal-like. If this keeps them out of
trouble long enough, after reelection they'll just stick their hands
back in your pocket next year.
If you don't think there's truth to my cynicism, then
why are Washington politicians intent on sending out "rebates" even to
those who don't pay a cent in taxes? There is an honest definition
of the term rebate, but what the government is proposing certainly
doesn't fit it.
rebate >verb - 1. a) to give back (part of
an amount paid); b) to make a deduction from (a bill) ; 2. to
reduce, lessen; 3) >noun - a return of part of an amount paid,
as for goods or services, serving as a reduction or discount.
-- Webster's New World Dictionary
A "tax rebate" for those who don't earn enough to pay
taxes? Now the push by AARP for "tax rebates" for those collecting
Social Security benefits tax-free? What a perfect example of
Doublespeak -- like changing the long-accepted term "illegal alien"
to "undocumented worker" or some other misleading euphemism.
And speaking of illegal aliens, how long before they
march on Washington by the millions, demanding their "tax rebate" along
with all the other freeloaders and tax-avoiders?
Call it a one-time government grant. Call it
social welfare for all. Call it a redistribution scheme.
Call it priming-the-pump. Just don't call it a rebate if
the recipient paid nothing that can possibly be rebated. Try
getting a rebate in the private sector for any product without producing
a sales receipt proving that you paid for it!
Boston Globe columnist Jeff Jacoby was unfortunately
wrong. Yes, there is a free lunch if you don't pay taxes to begin
with but still get a "rebate"!
As always, the Catch-22 is Washington's need for
ever-higher taxes -- to keep feeding government's ceaseless
over-spending, to spend attempting to keep up with growing federal
deficits and an incomprehensibly huge national debt.
As CLT member and author Robert Kelly notes in his
latest book, "National
Public Debt . . .":
When Truman left office, public debt was $215
billion, most of it directly related to the cost of World War Two
that had to be partly financed by issuing U.S. securities -- a
sensible use of the nation’s borrowing power....
Since that time, despite the fact that the U.S. was able to afford,
out of current revenues, most of the increase in primary costs
during the Korean, Vietnam and Cold Wars, debt increased to $4.8
trillion, fundamentally caused by uninterrupted annual deficits. And
during this time primary costs were funded by borrowings, instead of
by current revenues.
Washington can't afford a recession accompanied by
diminished federal revenue. The term for government "spending" has
morphed over the years into another useful euphemism, "investment." In
this situation, spending on one-time universal "rebates" can
actually be
considered an investment, to keep the long-term revenue stream flowing
and politicians' seats secure.
If it works.
 |
|
Chip Ford |
The Wall Street Journal
Saturday, January 19, 2008
Bush, Democrats Spar on Stimulus
Drive for Deal Remains
Strong, but Sides Differ On Who Gets Tax Relief
By John D. McKinnon, Damian Paletta and Sarah Lueck
WASHINGTON -- As President Bush laid out his vision for an economic
stimulus that could reach $150 billion, Democrats in Congress and the
administration diverged about how to spread around its benefits.
The tension is emerging as a sticking point amid broad consensus that
the government should do something quickly to prop up the lagging
economy. The White House wants tax cuts to help a wide range of
individuals and businesses. Privately, it has floated a plan that
focuses on rebates of up to $800 for individuals and $1,600 for married
couples.
In addition to tax cuts, congressional Democrats say they also want
spending targeted at specific groups such as the unemployed. They have
also discussed denying rebates to taxpayers who earn more than $85,000
and offering them to those who don't pay income taxes at all. Both ideas
are likely to be opposed by the White House, at least initially.
President Bush's announcement of his plan Friday did little to calm
financial markets. Market observers suggested Mr. Bush's comments
disappointed investors who were expecting more. The Dow Jones Industrial
Average, which has fallen nearly 9% since the beginning of the year,
opened higher but lost ground as details of the president's speech
emerged. The Dow ended the day down 59.91, or 0.5%, at 12099.30. It shed
4% in the past week.
The central elements of the plan will likely echo the package put in
place during the slowdown that followed the end of the dot-com bubble in
2001. According to economists, the results were mixed. Many say the
rebate checks, which were mailed only to U.S. taxpayers, successfully
boosted spending. But certain business tax breaks from 2001 through 2004
had a more limited effect.
"My judgment, and I think the judgment of most of the empirical analyses
that have been done, was that the rebates in 2001 did have some impact
on spending and that that was of some assistance in keeping the 2001
recession relatively moderate," Federal Reserve Chairman Ben Bernanke, a
former top economic adviser to President Bush, told a congressional
committee in the past week.
Some have questioned the impact of the 2001 rebate. Joel Slemrod, an
economics professor at the University of Michigan who has studied the
rebate checks, said the infusion must be measured in the context of an
economy whose annual output at the time was around $10 trillion. "That's
not a huge stimulus," he said.
Despite the market's disappointment, the plan President Bush announced
Friday, which is equivalent to about 1% of gross domestic product, came
in at the high end of expectations in Washington. Administration
officials said it would make room for roughly half a million jobs that
otherwise wouldn't exist. In an interview, Treasury Secretary Henry
Paulson said the president envisions certain business tax breaks that
would be in place for no more than a year, to spur companies to make
immediate investments.
"This growth package must be built on broad-based tax relief that will
directly affect economic growth, and not the kind of spending projects
that would have little immediate impact on our economy," Mr. Bush said
at the White House on Friday morning, in a warning shot for Democrats.
Democrats argue the administration's approach avoids the real problem:
homeowners squeezed by the housing mess and lower-income people hit by
higher prices for heating oil and other goods. Democratic Sen. Max
Baucus, chairman of the committee with jurisdiction over tax issues,
plans a series of hearings on stimulus proposals starting Tuesday. In a
written statement, he said he supports tax rebates as a "foundation" of
the bill, but also wants to "build beyond tax relief to further address
the needs of Americans."
For all their haggling, Democrats and Republicans said momentum was
strong behind getting a deal, because both sides fear the political and
economic price if nothing is done.
The differences reflect the still-fuzzy nature of the economic problem
officials are trying to address. Unemployment remains fairly low at 5%
and the overall economy, while slowing, isn't necessarily headed for a
recession. "It is still a relatively healthy economy," said Mr. Bush's
top economist, Ed Lazear, at a briefing Friday. "We want to keep it that
way, and that's the reason that we're moving in this direction."
In the Senate, split almost exactly between Democrats and Republicans,
leaders will have to find a way to avoid a drawn-out debate. Republicans
want higher earners to be part of a tax rebate. Even some Democrats in
the Senate are likely to want to push the $85,000 cap higher. The next
step is a Tuesday meeting between top lawmakers and Mr. Bush.
In the summer of 2001, the government mailed a total of $38 billion in
$300 and $600 one-time rebate checks to two-thirds of U.S. households. A
2004 study by economists from the U.S. Labor Department, Princeton
University and the University of Pennsylvania estimated that the rebates
directly increased aggregate consumption expenditures by about 0.8% in
the third quarter of 2001 and 0.6% in the fourth quarter of 2001. In
other words, most of the rebates quickly turned into spending.
Multiple studies say those most likely to spend rebate checks are low-
and middle-income households with less access to credit. That boosts
Democratic arguments that the rebates should be made available even to
those who don't pay taxes.
"The largest bang for the buck tends to come from households that are
relatively constrained in their ability to spend otherwise," said James
Poterba, head of the economics department at the Massachusetts Institute
of Technology.
Another likely part of the stimulus package is expedited tax deductions
for businesses, designed to encourage investment. Between Sept. 10,
2001, and Jan. 1, 2005, businesses were allowed to immediately deduct
from their taxes between 30% and 50% of investments on things like
machinery and equipment.
Two University of Michigan researchers found that the tax incentive
added 100,000 to 200,000 jobs and increased the gross domestic product
by a scant 0.1% to 0.2%, a finding bolstered by other research. One
problem: Spreading incentives over several years didn't provide an
immediate spur to spending.
Phillip Swagel, the Treasury Department's assistant secretary for
economic policy, said many businesses didn't take advantage of the
incentive because they were coming off several quarters of losses and
didn't need the extra tax break. This time, many businesses, including
those in high-tech, remain profitable and might use a tax break if they
could get it.
In laying out principles for what Mr. Bush termed a "growth" package,
the president and his top advisers avoided talking about specifics. The
unofficial White House plan, floated by the administration on Capitol
Hill in recent days, would suspend the federal tax code's 10% income tax
rate. That's the bottom rate that everyone with taxable income pays.
But millions of lower-income workers pay no federal income tax because
existing breaks wipe out their exposure. According to Jason Furman at
the Brookings Institution, 57 million households would get no benefit.
That includes about 30 million households with wage earnings. The rest
are mostly retirees. There are about 149 million households in all,
which means about 37% of the total would get no benefit. Conservatives
question the fairness of giving rebates to people who paid no income
tax.
Democrats took the White House silence on details as a sign that it's
willing to give ground. They are working on alternatives, such as a
rebate for everyone who files a tax return. Other possibilities are
rebating payroll taxes or sending rebates to those who receive the
Earned Income Tax Credit or the Child Tax Credit.
--Michael M. Phillips and Mark Gongloff contributed to this article
Associated Press
Thursday, January 24, 2008
Tax rebates deal announced
By Andrew Taylor
WASHINGTON --Congressional leaders announced a deal with the White House
Thursday on an economic stimulus package that would give most tax filers
refunds of $600 to $1,200, and more if they have children.
House Speaker Nancy Pelosi said Congress would act on the agreement --
hammered out in a week of intense negotiations and uncustomary
bipartisanship -- "at the earliest date, so that those rebate checks can
be in the mail."
President Bush praised the agreement at the White House, saying it "has
the right set of policies and is the right size."
The rebates, which would go to about 116 million families, had appeal
for both Democrats and Republicans. Pelosi's staff noted that they would
include $28 billion in checks to 35 million working families who
wouldn't have been helped by Bush's original proposal. Republicans, for
their part, were pleased that the bulk of the rebates -- more than 70
percent, according to an analysis by Congress' Joint Tax Committee --
would go to individuals who pay taxes.
Individuals who pay income taxes would get up to $600, working couples
$1,200 and those with children an additional $300 per child under the
agreement. Workers who make at least $3,000 but don't pay taxes would
get $300 rebates.
The first rebate payments could begin going out in May, and most people
could have them by July, said Treasury Secretary Henry Paulson, noting
that the IRS will already be overwhelmed processing 2007 tax returns.
The rebates were expected to cost about $100 billion, and the package
also includes close to $50 billion in business tax cuts.
The principal players in pulling the deal together were Pelosi, House
Republican leader John Boehner and Paulson. The package would allow
businesses to immediately write off 50 percent of purchases of plants
and other capital equipment and permit small businesses to write off
additional purchases of equipment. A GOP-written provision to allow
businesses suffering losses now to reclaim taxes previously paid was
dropped.
Pelosi, D-Calif., agreed to drop increases in food stamp and
unemployment benefits during a Wednesday meeting in exchange for gaining
the rebates of at least $300 for almost everyone earning a paycheck,
including those who make too little to pay income taxes.
"I can't say that I'm totally pleased with the package, but I do know
that it will help stimulate the economy. But if it does not, then there
will be more to come," Pelosi said.
Boehner said the agreement "was not easy for the two of us and our
respective caucuses."
"You know, many Americans believe that Washington is broken," the Ohio
Republican said. "But I think this agreement and I hope that this
agreement will show the American people that we can fix it and will
serve to move along other bipartisan agreements that we can have in the
future."
Paulson said he would work with the House and Senate to enact the
package as soon as possible, because "speed is of the essence." But he
also cautioned that "the work is far from over."
The Treasury Department has already been talking to the IRS about
getting the checks out "as quickly as possible, recognizing that the tax
filing season is ongoing," said Treasury spokesman Andrew DeSouza.
The rebates would phase out gradually for individuals whose income
exceeds $75,000 and couples with incomes above $150,000, aides said.
Individuals with incomes up to $87,000 and couples up to $174,000 would
get partial rebates. The caps are higher for those with children.
The agreement left some lawmakers in both parties with a bitter taste,
and they complained that their leaders had sacrificed too much in the
interest of striking a deal. Many senior Democrats were particularly
upset that the package omitted the unemployment extension.
"I do not understand, and cannot accept, the resistance of President
Bush and Republican leaders to including an extension of unemployment
benefits for those who are without work through no fault of their own,"
Rep. Charles B. Rangel, D-N.Y., the Ways and Means Committee chairman,
said in a statement.
Sen. Max Baucus, D-Mont., the Finance Committee Chairman, said leaving
out the unemployment extension was "a mistake," as he announced plans to
craft a separate stimulus package in the Senate starting next week.
Majority Leader Harry Reid said the goal is to send the package to the
White House by Feb. 15 for Bush's signature, but he noted the Senate
would likely try to add more spending to the package.
"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," Reid said in a
statement.
Asked about this, Paulson praised Reid's leadership but said, "I don't
know what he has in mind."
Bush has supported larger rebates of $800-$1,600, but his plan would
have left out 30 million working households who earn paychecks but don't
make enough to pay income tax, according to calculations by the Urban
Institute-Brookings Institution Tax Policy Center. An additional 19
million households would receive only partial rebates under Bush's
initial proposal.
To address the mortgage crisis, the package raises the limit on Federal
Housing Administration loans from $362,000 to as high as $729,750 in
expensive areas, allowing more subprime mortgage holders to refinance
into federally insured loans. To widen the availability of mortgages
across the country, it also provides 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.
The Boston Globe
Wednesday, January 23, 2008
Remember, there's no free lunch
By Jeff Jacoby
Politicians left and right are jumping on the "stimulus" bandwagon, and
several commentators have recalled Richard Nixon's famous 1971 remark,
"We're all Keynesians now." The famed British economist John Maynard
Keynes died in 1946, so what he would have thought of Nixon's economics
must forever remain a mystery. But if "Keynesian" is shorthand for
believing that governments can boost employment and keep the economy
humming by stimulating demand through higher spending, then the
political landscape today is indeed awash with latter-day Keynesians.
Which makes this a good time to recall an observation associated with
another famed economist, the late Nobel laureate Milton Friedman: "There
ain't no such thing as a free lunch."
With the economy weakening, home and stock values sinking, and recession
fears growing, pols of every stripe have been hustling to put a
"stimulus" plan on the table. The Bush administration is calling for
temporary tax relief worth about $140 billion, reportedly in the form of
tax-rebate checks of up to $800 per taxpayer. Several of the candidates
vying to succeed George Bush are weighing in with plans of their own.
Barack Obama, for example, wants to send $250 checks to low- and
middle-income earners and to seniors on Social Security, followed by a
second round of $250 checks if the first doesn't do the trick. Hillary
Clinton proposes to spend $40 billion on rebate checks and another $70
billion on new housing, energy, and unemployment benefits.
The idea behind these plans is to get money into the hands of consumers
who will spend it quickly, thereby revving up demand and "stimulating"
the economy back to good health. There's just one problem: There ain't
no such thing as a free lunch.
Sure, if you get an $800 kiss in the mail from Uncle Sam, you're likely
to spend it on something - kitchen cabinets from Home Depot, say, or a
trip with the kids to SeaWorld, or a donation to Special Olympics. That
$800 will continue to circulate in the economy as each recipient spends
it on something else, each time adding another $800 worth of economic
activity to the nation's GDP.
But where did that $800 come from in the first place? Does the federal
government have a warehouse full of surplus money it can spread around
when recession clouds appear on the horizon? Of course not. Washington
already spends more money than it has; just three months into the new
fiscal year, the budget deficit is up to $107 billion. And since no one
is proposing to pay for a stimulus package by curtailing other spending,
the only way Uncle Sam is going to come up with your $800 is to borrow
it.
In other words, before any money can be injected into the economy by
means of rebate checks or other benefits, it must first be extracted
from the economy by means of borrowing (or taxation). The $800 you spend
at Home Depot or SeaWorld is $800 not available to the bond buyer who
lent Uncle Sam the money for your rebate check. Washington cannot
jump-start the US economy by taking money from Jane and giving it to
Joan any more than I can boost my own prosperity by withdrawing money
from a downtown ATM and depositing it in an uptown ATM. There's no free
lunch.
One talking point most of the would-be stimulators seem to agree on is
that any plan to goose the economy must be short-lived. It "must be
temporary and take effect right away," Bush said on Friday. House
Speaker Nancy Pelosi likewise called for "a solution that is timely,
targeted, and temporary."
But if Washington really has the power to restore vim and verve to the
nation's economy by simply moving money around, why not do so all the
time? Why should there ever be an economic slowdown if government
spending can prevent it?
Here's why: Because the business cycle hasn't been repealed. Because
booms are still followed by busts. Because politicians and policymakers
cannot make a $14 trillion economy jump through hoops, particularly not
by going even more deeply into debt.
The engine of economic growth is creating new wealth, not redistributing
existing wealth. Rebating some of last year's taxes or expanding
welfare-like benefits won't encourage anyone to be more productive.
Permanently lowering tax rates - letting Americans keep more of the
money they earn - will.
True, tax cuts instead of tax rebates would mean no kiss in the mail.
Most politicians would rather treat you to a free lunch than stimulate
you to work, invest, and take more risks. Just remember one thing about
that free lunch: There ain't no such thing.
Associated Press
Saturday, January 26, 2008
Senate Democrats mull adding retirees to rebate plan,
extending jobless benefits
WASHINGTON - Retirees living off Social Security are frustrated that
they won’t get tax rebate checks through a bipartisan economic stimulus
package before the House. Senate Democrats Friday began efforts to
include them.
The Senate is also considering an extension of jobless benefits to the
$150 billion package of rebates and business tax cuts in a deal wrapped
up Thursday between House leaders and President Bush.
Bush urged Congress on Friday to quickly pass the package without any
further spending. "I strongly believe it would be a mistake to delay or
derail this bill," Bush said.
"I understand the desire to add provisions from both the right and the
left," he said, adding that would be an error.
Senate Democrats are refusing to rubber stamp the House measure. That
raises the possibility of protracted negotiations if Democrats are
successful in adding giving retirees tax rebates, extending unemployment
benefits, boosting heating subsidies for the poor and temporarily
increasing food stamp payments.
Those are all items floated by top Senate Democrats left out of the
negotiations between the administration and House leaders.
They were all considered but tossed overboard in intense talks that
produced a hard-won agreement among Bush, House Speaker Nancy Pelosi and
Minority Leader John Boehner.
Their plan would give individual taxpayers up to $600 in rebates,
working couples $1,200 and those with children an additional $300 per
child. The rebates would phase out gradually for individuals whose
adjusted gross income exceeds $75,000 and for couples with incomes above
$150,000.
But it would leave out about 20 million senior citizens living chiefly
on Social Security. They wouldn’t get rebate checks unless they have at
least $3,000 earned income or pay income taxes based on other sources
such as earnings, interest, investments or private pension plans.
"Less than half of all Americans 65 and older would get it," said AARP
spokesman Jim Dau.
It’s not clear whether seniors would ultimately be included in the final
bill sent to Bush’s desk.
The House is planning to pass the measure as early as Tuesday, though
Senate debate won’t begin until its Finance Committee drafts and votes
on an alternative, perhaps on Thursday. That gives the Senate two weeks
to pass its bill, reach an agreement with the House and Bush and meet
Majority Leader Harry Reid’s promise of wrapping it all up by Feb. 15.
At a news conference Thursday, Pelosi, Boehner and Paulson were careful
to respect the Senate’s right to change the bill.
"This is not going to preclude the Senate from being the Senate and
doing what they do," said Boehner.
At the same time, however, the three clearly believe that the Senate
will feel enormous pressure to largely stick with the outlines of the
Bush-Pelosi-Boehner agreement.
The worry is that the Senate will load up the bill with costly ideas
that could provoke a confrontation with Bush and slow down the bill —
and delay mailing the rebate checks.
It’s particularly risky for Democrats controlling Congress, who might
get blamed for any delays. But Democrats vowed the bill will still get
sent to Bush’s desk within three weeks and they promised not to go
overboard.
"Pigs get fat. Hogs get slaughtered," said a top Senate Democratic staff
aide. "We’re not interested in loading this up."
Much debate centers on whether to extend unemployment benefits for
jobless people whose benefits have run out. Some Democrats, such as Rep.
Charles Rangel of New York, chairman of the powerful Ways and Means
Committee, were livid that unemployment insurance was dropped by Pelosi
in end-stage talks on Wednesday.
Senate Democrats appear confident they can muster the 60 votes needed to
overcome procedural hurdles in front of efforts to boost unemployment
benefits. If unemployment insurance is part of a Senate bill sent back
over to the House, Pelosi would face a quandary: Should she stand by her
deal with the President or side with the Senate?
Some Democrats think Bush would have a difficult time threatening a veto
over unemployment insurance.
The Senate often prevails in its battles with the House, often because
once the Senate musters bipartisan support for legislation, their
negotiators simply insist that any changes could provoke a minority
party filibuster.
But this is one time when the House seems to have the upper hand.
"Boehner told (Pelosi) very early on ... let’s try to get something done
here that the White House can agree on and so we can thrust it upon the
Senate," said a senior House GOP aide. "The unspoken word was that she
could jam this down Harry Reid’s throat and I think she likes that
idea."
Associated Press
Sunday, January 27, 2008
Treasury secretary pushes Senate to act
on economic package
By Ben Feller
WASHINGTON - President Bush’s chief negotiator on an economic aid deal
said Sunday the Senate should quickly get behind a plan or risk drawing
the resentment of a frustrated public.
The president and House leaders have agreed on a proposal to provide tax
rebate checks to 117 million families and give businesses $50 billion in
incentives to invest in new plants and equipment. The goal is to help
head off a recession and boost consumer confidence.
"I don’t think the Senate is going to want to derail that deal,"
Treasury Secretary Henry Paulson said. "And I don’t think the American
people are going to have much patience for anything that would slow down
the process."
But many senators say they are entitled to their ideas and that they
never agreed to be deferential to the House and the White House on the
final terms. Senate Majority Leader Harry Reid, D-Nev., agreed that the
negotiations should move through the House first, but he and other
senators still want to have input.
The Senate is considering adding such elements as extending unemployment
benefits for workers whose benefits have run out, boosting home heating
subsidies, raising food stamp benefits and approving money for public
works projects.
When asked if such ideas would be deal-breakers, Paulson said he did not
"want to cast a shadow on this rare bipartisan moment."
Paulson negotiated the deal with House Speaker Nancy Pelosi, D-Calif.,
and Minority Leader John Boehner, R-Ohio. The secretary said some of the
elements the Senate is considering may have merit but were excluded from
the current deal to keep it simple and targeted.
"Complexity is our enemy," Paulson said in an interview on "Fox News
Sunday."
"I believe that the House leaders were very decisive in keeping it
simple," he added. "And I believe and I’m optimistic that the Senate
leaders will do the same."
The president, too, has pushed the Senate to act swiftly. The White
House is trying to strike a balance — respecting the right of the Senate
to influence the legislation, but keeping the pressure on so that no
momentum is lost in giving a boost to a sagging economy.
The administration hopes to start getting rebate checks out in May,
assuming that Congress acts in the next few weeks.
Paulson said the economic program would boost job creation, consumer
spending and confidence in the stock market.
In another appeal to Congress, Paulson said: "Bipartisan agreement —
implemented — I think will show the American people that Republicans and
Democrats are putting the economic security of the American people ahead
of their own political interests."
Among others offering views on the economic plan, Republican
presidential contender Mike Huckabee said Sunday it should include money
for public works.
Paulson said he knows that idea has some support, but he does not agree
with it. He said the views of the presidential candidates tend to look
ahead to next year.
"What we’re again focused on here is something simple to get money into
the economy quickly to make a difference, and infrastructure spending
doesn’t do that," Paulson said in a later interview on "Late Edition" on
CNN.
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