House begins work on nearly $100 billion stimulus plan with new rebate checks
Friday, October 12th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ A nearly $100 billion plan to boost the weak economy, crafted by House Republicans, would offer millions of lower-income people a new round of tax rebate checks, provide states with grants to tackle unemployment and give businesses several tax breaks.
``We must act to stimulate a slow economy, to help laid-off workers,'' President Bush said at his news conference Thursday night. The House plan reflects many of Bush's priorities.
The House Ways and Means Committee began debating the measure Friday, with a vote expected later in the day and floor action likely next week. Democrats countered with their own $110 billion plan, which also included rebate checks, but added $32 billion for projects aimed at improving security and boosting economic development.
The new round of rebates would be intended for an estimated 30 million workers whose main federal tax liability is the payroll tax that funds Social Security, Ways and Means Committee Chairman Bill Thomas said Thursday. Those workers did not qualify for the earlier checks included in the recently enacted 10-year, $1.35 trillion tax relief measure.
``It's time to face facts _ a short term recession is unavoidable. But the depth and duration of a recession can be minimized with concrete action,'' Thomas said Friday as the committee began considering the bill.
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. Individuals who got partial rebates this summer would get another check to make up the difference.
The checks would be mailed out by Dec. 31.
Bush has embraced the idea of a new round of checks, as have most Democrats, as one way to spur consumer spending and revive a struggling economy weakened further by the Sept. 11 terrorist attacks.
The president has proposed a 13-week extension of unemployment benefits in hard-hit states; the House plan is likely to go further.
Thomas, R-Calif., said the package would include about $9 billion in flexible grants to states that could be used for unemployment benefits, health insurance premiums for laid-off workers and other needs. Workers could also withdraw money from retirement accounts tax-free to pay health insurance premiums.
The package was estimated to cost $99.5 billion in 2002 and $159.4 billion over the next 10 years.
A senior Bush administration official said the legislation covered the president's major proposals for a stimulus package but that the White House would continue working with Democrats and Republicans as the measure moves to the Senate.
``There is still a long process ahead of us,'' said Mark Weinberger, assistant Treasury secretary for tax policy.
Democrats, however, complained that Republicans had largely frozen them out as the bill was developed and that its cost could trigger deficit spending for years to come.
``In terms of bipartisanship, it is a backward step,'' said Rep. Sander Levin, D-Mich.
Other items in Thomas's preliminary package:
_Enhanced expensing write-offs of 30 percent for each of the next three years for business capital purchases.
_Repeal of the corporate alternative minimum tax, retroactive to Jan. 1 of this year.
_No cut in capital gains tax rates but a change in the holding period for investments so that more of them would qualify for the 18 percent tax rate. That rate now applies to 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 beginning in 2002, up from $3,000 under current law.
_Accelerating cuts in the 27 percent income tax rate so that it takes effect in 2002, instead of slowing phasing in 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.
A Democratic alternative includes about $38 billion in tax cuts for businesses and individuals; $40 billion for unemployment and health-care coverage for many workers; and $32 billion for projects improving security and for economic development in cities and rural areas.
The effort marks the beginning of the legislation process. Any House bill would require approval by the Senate, which is likely to make changes.