Senate Considers Economic Stimulus Package
A 216 to 214 vote, split mostly along party lines, highlighted the rift between House Democrats and Republicans on how best to steady a staggering economy hit hard by the recent terrorist attacks.
Lawmakers from both parties acknowledge the final economic stimulus package will probably not pass in the current House form because most Democrats and some Republicans say it slants too heavily in favor of corporations and wealthy Americans. Seven Republicans crossed partylines to vote against the bill, and three Democrats voted for it.
The Republican plan costs $160 billion over the next 10 years. Main provisions include decreasing the capital gains tax rate from 20 percent to 18 percent, which would cost the U.S. Treasury $10 billion over 10 years; eliminating the corporation alternative minimum tax, which limits corporate tax deductions and would cost $25 billion; and creating a permanent tax break on income earned overseas by U.S. companies at the cost of $21 billion.
The legislation includes several permanent tax cuts that would cost more than $210 billion over the next three years, though some of that would be recouped over the decade.
The Republican plan included a $300 individual payment for the 30 million lower-income Americans who did not benefit from the tax cut earlier this year because they do not earn enough to pay income taxes, as well as a $9 billion transfer in federal unemployment funds to the states and a $3 billion transfer to cover the health care needs of the unemployed.
Democrats unsuccessfully proposed a $125 billion alternative stimulus package that would pay for a $300 rebate, $3 billion for school construction and a series of other tax benefits by freezing the top income tax rate at 38.6 percent.
The Democrats’ plan also set aside $32 billion for unemployment compensation, economic development, security and health benefits.
Supporters of the Republican bill say dramatic tax cuts are necessary to keep the U.S. out of a deep recession.
“We need to put our foot on the gas right now,” said Rep. Bill Thomas (R-Calif.), chairman of the Ways and Means Committee.
Democrats argue the bill is a partisan attempt to aid large corporations.
“You couldn’t write a more dangerous piece of political posturing if you tried,” said Democratic Caucus Chairman Martin Frost (D-Texas). “Shame on the other side of the aisle. Shame.”
The Bush administration has expressed support for the House bill, but said it will have to be combined with Senate Democrat proposals for fewer corporate tax cuts and significantly more spending.
Speaking just before the House vote, President Bush pushed for quick Senate action.
“I urge the Senate to act quickly to make sure that the American people understand that at this part of our homeland defense, our country and the Congress is united.” the president said.
The House measure is composed of about 85 percent tax cuts, while Senate Democrats propose devoting about 75 percent of the stimulus package to new spending.
Senate Majority Leader Tom Daschle (D-S.D.) told reporters yesterday he was confident Mr. Bush would help forge a compromise that fulfills the goals laid out by congressional leaders in a series of private meetings over the last few weeks.
Daschle stressed any economic stimulus package should include temporary rather than permanent tax cuts and be evenly divided between spending and tax relief.
“I’m appreciative of his adherence to those principles,” Daschle said of the president, “and I hope we can come up with a bill on a bipartisan basis that allows us to do that.”