U.S. House Approves $146 Billion Economic Stimulus

U.S. House Approves $146 Billion Economic Stimulus

Jan. 29 (Bloomberg) -- The U.S. House approved a $146 billion economic stimulus plan aimed at averting an election-year recession in part by sending tax-rebate checks to about 111 million Americans.

Lawmakers voted 385-35 to approve legislation that would also expand investment tax breaks for business and add capital to the slumping mortgage market by allowing federally chartered companies Fannie Mae and Freddie Mac to buy mortgages above the current federal limit. Republican and Democratic lawmakers said the bill would give a much needed jolt to the sagging economy.

``This is good news for the American public,'' said House Majority Leader Steny Hoyer, a Maryland Democrat. ``This stimulus will put money in the hands of hard-working Americans to give them the help they need and at the same time stimulate the economy.''

House leaders negotiated the stimulus plan with President George W. Bush. The House vote sends the bill to the Senate, where some senators said they would try to alter the House version, potentially delaying passage.

Majority Leader Harry Reid, a Nevada Democrat, wants to complete work on the legislation by the end of the week, said his spokesman Jim Manley.

Distributing Checks

Lawmakers have said they want to get the bill to Bush by Feb. 15 so the government can begin distributing checks before June. Under the House measure, individuals would receive up to $600 and couples would get up to $1,200. Families would get $300 for each child.

Finance Committee Chairman Max Baucus, a Montana Democrat, yesterday proposed adding an extension of unemployment benefits and giving tax rebates to some senior citizens and people living on disability who Baucus says were left out of the House proposal. A group of 22 senators, including Democratic presidential candidate Hillary Clinton, released a letter to congressional leaders today urging them to add $5 billion to the stimulus package for transportation-related projects.

House Minority Leader John Boehner, an Ohio Republican, declined to comment today on Baucus's plan, saying: ``We don't know what they're going to produce at the end of the day and until they do I think I'll reserve comment.''

Act Quickly

Bush urged lawmakers in his State of the Union address last night to act quickly.

``Congress must pass it as soon as possible,'' he said. ``The temptation will be to load up the bill. That would delay it or derail it, and neither option is acceptable.''

The House plan would distribute checks of $300 to those who earned at least $3,000 last year. Higher earners would earn as much as $600 for individuals, $1,200 for couples and an additional $300 for each child. The benefits would be phased out for individuals who earned more than $75,000 and couples who took home at least $150,000.

The tax-rebate plan would cost the Treasury about $100 billion this year according to Congress's Joint Committee on Taxation. Lawmakers waived congressional rules requiring them to offset that expense with savings elsewhere in the budget in order to avoid adding to the deficit.

``Deficits I think are justified in the time when you have a crisis economically confronting you and you want to stimulate the economy,'' Hoyer said.

Retired Americans

Baucus has proposed providing $500 for individuals, $1,000 for couples and $300 for each child under 17. The Senate plan would count Social Security benefits as income, making millions of retired Americans eligible for a rebate.

The Senate proposal also drops House provisions phasing out benefits for wealthier Americans.

Ways and Means Committee Chairman Charles Rangel, a New York Democrat, criticized that provision of Baucus's plan, saying it would jeopardize the legislation because it would increase ``the divide between rich and poor.''

The House bill would expand business tax breaks primarily by providing a 50 percent bonus deduction for new equipment. That provision would cost the Treasury about $44 billion, according to JCT.

Baucus's proposal omits both the bonus depreciation provisions and the mortgage hikes. Instead, his plan would target unprofitable companies by giving them a tax refund for losses over the past five years rather than the current limit of two years. His plan would also extend unemployment benefits for an additional 13 weeks with extra aid going to states recording unemployment rates of 6 percent or higher. The Finance Committee will consider Baucus's plan tomorrow.

The House bill is H.R. 5140.

BLOOMBERG