Senate Finance Committee passes stimulus plan

The Senate Finance Committee passed its economic stimulus plan Wednesday, refusing to rubber-stamp a rival plan negotiated between the House and President Bush.

The bill was approved in a 14-7 vote, but only after income caps on those eligible to receive tax rebates were reinstated. The final bill doubled the income caps included in the House bill so that rebates are phased out for individuals earning at least $150,000 and couples receiving $300,000.

{mosads}The Senate bill also broadened the House-Bush proposal by including 21 million seniors and 250,000 disabled veterans that had been excluded, and by adding an extra 13  weeks of unemployment benefits for jobless Americans.

The striking of the income ceilings in an initial bill offered by Finance Chairman Max Baucus (D-Mont.) had drawn criticism from House and Senate Democrats, prompting Senate Majority Leader Harry Reid (D-Nev.) to say their elimination made him “want to gag.”

By reinserting caps and then doubling them, Baucus hoped to win critical bipartisan support from Republicans while placating House Democrats who had negotiated hard to win the caps last week. The bill also expressly excludes members of Congress from receiving the rebates.

The Senate could vote on the package as early as Thursday. Initially an earlier vote appeared possible, but Reid said an agreement to bring it to a vote Wednesday night fell apart at the last minute.

Its chances are far from certain, given GOP opposition to the package. Seven of the committee’s 10 Republicans voted against it, including Majority Whip Jon Kyl (R-Ariz.). Sen. Charles Grassley (Iowa), the panel’s ranking Republican who works closely with Baucus, was one of three Republicans to support it.

All of the committee’s Democrats voted to approve the bill.

Baucus said he believed 60 votes would be needed to invoke cloture and cut off floor debate on the bill, and that the support is there. He described his committee’s bill as far superior to the House-Bush plan because it includes seniors and veterans.

“The big picture is that this bill provides direct stimulus to almost  all Americans,” Baucus said. “It is very, very targeted to people that  will spend the money. And it’s simple. Simplicity is the key.”{mospagebreak}

In addition to Kyl, GOP Sens. Mike Crapo (Idaho), Pat Roberts (Kan.), Orrin Hatch (Utah), John Sununu (N.H.), John Ensign (Nev.) and Jim Bunning (Ken.) voted against the measure. Kyl, who offered a series of amendments that were voted down, said the stimulus bill will do little to revive the economy.

“There’s an old saying that every complex problem has a simple and  wrong solution. That’s what I think we’re doing here,” Kyl said. “Our  economy grows as GDP grows. A one-time shopping spree is not going to  help a business hire a new employee or buy new equipment. Only a  permanent tax reduction will do that.”

{mosads}Bunning was even more blunt. “I don’t know if we can improve on the House package,” he said. “But I do know we can make it worse.”

Republican Sens. Olympia Snowe (Maine) and Gordon Smith (Ore.) joined Grassley in voting for the package.

The centerpiece of the Senate bill is a rebate plan costing $126.4  billion over 10 years and offering Americans a flat tax rebate of $500 for  individuals, $1,000 for couples and $300 per child. Those with incomes of at  least $3,000 would qualify, with veterans’ disability benefits and Social Security benefits counting toward that qualification requirement.

By comparison, the House plan costs $109 billion over 10 years and  offers rebates of $600 for individuals, $1,200 for couples and $300  per child, with an earned income of at least $3,000 the only  qualification.

Both House and Senate plans exclude illegal aliens, but the Senate  plan goes further by requiring all recipients’ spouses and children to  have valid Social Security numbers.

The Senate bill also offers billions in business tax break extensions  to encourage energy efficiency, such as credits to manufacturers of  energy-efficient new homes and appliances.

It would also extend unemployment benefits through a two-tiered  system. Besides adding an extra 13 weeks of benefits, it would grant a  total of 26 extra weeks in states with the highest unemployment.  States with a three-month average of 6.5 percent unemployment or more  would qualify as high-unemployment states.

Committee members mostly refrained from tacking on individual  priorities, although Sen. John Kerry (D-Mass.) pushed through an amendment that provides $3 billion in mortgage revenue bonds as refinancing aid for an estimated 2  million Americans facing foreclosure of their homes.

“The whole reason why we’re here is the subprime crisis,” he said. “I  can’t think of one thing that addresses the root cause of why we’re  here beside this.”

Senators were under pressure from the White House not to load up the bill with their priorities and therefore jeopardize the delicate deal between House leaders and Bush.

“We have to thread a needle here,” said Sen. Charles Schumer (D-N.Y.)  “Every one of us has goals… But keeping it simple and getting enough  votes to pass it is very important. It doesn’t mean we rubber-stamp  what the House did. But we can’t deviate too far and slow it down.”

However, senators suggested that a second stimulus bill could be drafted within weeks —with “Stimulus II” already becoming a buzzword. That sequel bill could be the ideal vehicle to carry leftover items such as road resurfacing, clean-energy incentives, tax revisions and especially help to the housing market.

Baucus and others said the option of a follow-up bill was especially  helpful in urging senators to hold onto their ideas a little longer.

“This isn’t the only bite at the apple,” Schumer said.