House Panel OKs $100B Sitmulus Plan
By CURT ANDERSON
WASHINGTON - A $100 billion economic stimulus plan that would provide tax rebate checks this year to millions of lower-income workers won approval Friday by a Republican-dominated House committee.
Democrats were unanimously opposed, saying the package contained too much business tax relief and not enough help for the unemployed.
Republicans portrayed the legislation as a much-needed tonic for a tottering economy that suffered a major shock after the Sept. 11 terrorist strikes. It includes President Bush's chief priorities, including a new round of rebate checks and accelerated income tax cuts, and effectively reduces capital gains taxes as sought by GOP conservatives.
"It's time to face facts: a short-term recession is unavoidable," said Bill Thomas, R-Calif., chairman of the House Ways and Means Committee. "But the depth and duration of a recession can be minimized with concrete action."
The legislation, written by House Republicans, was approved on a party-line 23-14 vote Friday by the committee and could reach the House floor as early as next week. It probably will undergo significant change after it reaches the Democratic-led Senate.
Senate Majority Leader Tom Daschle, D-S.D., said the legislation's grants to states for the unemployed would fall far short of what is needed, and the measure was virtually silent on such issues as spending for heightened anti-terrorist security and infrastructure. He said it did not represent an effort at bipartisan compromise.
"I'm disappointed that the House is going off on all of its tangents once again," Daschle told reporters. "I think the president is prepared to work with us, and I think at some point we're going to have to demonstrate a capacity for working through these issues."
At the White House, spokesman Ari Fleischer said the measure "includes some items the president did not ask for" in Bush's proposal for a plan of between $60 billion and $75 billion.
"He wants to work closely with the Democrats on this ... it's the beginning of the process," Fleischer said.
There are some areas of common ground in the plan _ estimated to cost $99.5 billion in 2002 and $159.4 billion over 10 years _ starting with the rebate checks.
The rebates would be intended for an estimated 30 million workers whose main federal tax liability is the payroll tax that finances Social Security. Those workers did not qualify for the earlier checks included in the recently enacted 10-year, $1.35 trillion tax cut measure.
The maximum amounts of the checks would be $300 for individuals, $500 for heads of households and $600 for married couples filing jointly _ identical to the previous checks. Taxpayers who got partial rebates this summer would get another check to make up the difference.
The checks would be mailed out by Dec. 31.
For the unemployed, the House measure includes $9 billion in flexible grants to states that could be used for unemployment benefits, paying health insurance premiums for laid-off workers or other needs. Workers also could withdraw tax-free money from retirement accounts to pay health insurance premiums.
Republicans said the business tax cuts, some of which drew sharp criticism from Democrats, were essential to spur investment and create jobs.
"These are not big, bad corporations," said Rep. Jim McCrery, R-La. "These are real jobs we're talking about."
Democrats sought to increase unemployment benefits, including the 13-week extension proposed by Bush, and provide 75 percent matching money for COBRA insurance policies available to laid-off workers. Those amendments were defeated on largely party-line votes.
Democrats also said the measure's long-term costs could trigger a return to chronic deficits and complained they were frozen out as the bill was developed.
"That is phantom bipartisanship," said Rep. Sander Levin, D-Mich. "That is not the way we should be acting if bipartisanship has any meaning."
Other highlights of the package:
-Enhanced expensing write-offs of 30 percent for each of the next three years for business capital purchases. This item has solid bipartisan support.
-Repeal of the corporate alternative minimum tax, retroactive to Jan. 1 of this year. Democrats would largely prefer a reduction, not repeal.
-On capital gains taxes, a change in the holding period for investments so that most would qualify for the lower 18 percent tax rate. That rate now applies to most investments held longer than five years; a 20 percent rate applies to most held longer than one year. Capital losses could also be deducted up to $4,000 in 2001 and $5,000 in 2002, up from $3,000 under current law. In 2003, it would revert to the $3,000 deduction.
-Cutting the 27 percent income tax rate to 25 percent in 2002, instead of slowly phasing in the cut by 2006.
-An increase from two years to five years in the time businesses can deduct current losses against past profits.
-Extension of several tax provisions that expire at the end of this year.
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