The U.S. Congress has all but ensured that at least $168 billion will be added to the federal deficit during the next two years. If there’s a silver lining, it’s that it could have been worse.
On Thursday evening, the Senate voted 81-16 to pass a fiscal stimulus package that would cost $151.7 billion in 2008 and $16.3 billion in 2009. The vote came just a day after the chamber narrowly prevented a vote on a bill that would have been about $40 billion more expensive than the one passed Thursday.
The House, which recently approved a $161 billion stimulus bill, is expected to pass the Senate’s plan, sending it to President Bush, who is expected to sign it.
Like the House bill, the Senate version provides tax rebates of up to $600 for individuals and $1,200 for couples, as well as several adjustments to business taxes. It also grants a $300 per child rebate to those receiving rebate checks. Unlike the House version, the Senate’s bill also gives $300 rebates to 20 million seniors who receive Social Security checks and disabled veterans and their survivors, as long as they’ve received at least $3,000 in benefits. And it includes a safeguard to prevent illegal immigrants from receiving a refund, a provision the House left out of its bill. Rebates are likely to be mailed in mid to late May.
As it goes when lawmakers vote to issue refund checks to their constituents, there were wide claims of victory, even from those said the House’s bill didn’t go far enough.
“These changes are a victory for all senators on both sides of the aisle who stood up to say this rebate should go to the folks who will stimulate our economy the fastest,” said Senate Finance Committee Chairman Max Baucus, D-Mont., who had originally championed the more expensive Senate proposal. However, his key provisions–extending rebates for those who receive Social Security and disabled vets–remained intact.
Boons for business: The bill allows small businesses to expense more of their qualified assets purchased in 2008 in lieu of depreciating them, raising the limit from $125,000 to $250,000 in 2008. The idea is to encourage businesses to buy more equipment.
In addition, the Senate’s plan provides a “bonus depreciation” of an additional 50% for assets purchased in 2008.
The bill also temporarily allows the government-sponsored mortgage finance companies Fannie Mae and Freddie Mac to buy individual home loans worth up to $729,750, up from the current limit of $417,000. The Federal Housing Administration would be allowed to insure loans as high as $729,750 as well.
Two elements that did not make it into the Senate’s bill: a one-year extension of investment tax credits for the solar energy industry and production tax credits for the wind, geothermal and biomass industries. Renewable energy advocates have been trying for months to include these provisions in legislation–notably last year’s energy bill–to no avail.
By Brian Wingfield
7 February 2008
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