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Details to be released today
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and Senate negotiators reached agreement Wednesday on a $789.5 billion
economic recovery package, which Democratic leaders will move to the House
and Senate floor for quick consideration -- House Majority Leader Steny
Hoyer (D-Md.) said the conference report could be on the floor today or
The package exceeds the cost of the entire Iraq war since the
invasion of 2003.
Details on the package will be released
today, but Senate Majority Leader Harry Reid (D-Nev.)
said more than one-third of the package ($282 billion) is dedicated to
tax cuts. The bill’s total cost comes in at less than both the Senate’s
$838 billion version and the House’s $819 billion measure.
Tax breaks were scaled back to reduce
the bill’s cost, including an expanded Senate credit
for home purchases and tax deductions for buying new cars -- an $11.5
billion break proposed by the Senate is now down to $2 billion, with tighter
limits on who qualifies. The proposal would allow buyers a federal income-tax
deduction on local taxes on new-car purchases.
First-time home-buyers could qualify for an $8,000
tax credit. The credit is slightly larger than the $7,500 credit in
existing law, but it is substantially less than a proposal in the Senate
bill that would have boosted the credit to $15,000 and broadened the
eligibility. In addition, the compromise bill waives a requirement that
the tax credit be repaid. The credit applies only to homes bought
between Jan. 1 and Aug. 31 of this year.
Homeowners who install new doors, windows or furnaces to
make their home more energy efficient would be able to get as much as
$1,500 back through new tax breaks.
President Obama’s signature tax
credit for workers also was trimmed, with income eligibility
levels retained but the benefit being reduced.
AMT patch. The bill includes
a one-year $70 billion “patch” to again prevent the Alternative
Minimum Tax (AMT) from hitting more taxpayers.
The measure would provide an additional
20 weeks of unemployment payments and health-care subsidies
for people who are out of work. Social Security recipients would receive
an additional $250 payment, and the federal government's contribution
to the Medicaid program would increase dramatically.
Some education funding that was cut from
the Senate bill appears to have been restored.
The conference committee upped spending
on infrastructure from $46 billion in the Senate measure
to $49.6 billion (for highway, bridge and mass transit construction).
They also added money for state stabilization funds. The House had planned
on a $79 billion fund, with the Senate at $39 billion; the conference
includes $53.6 billion for state stabilization.
Note: the bill includes more than $150 billion in public works
projects for transportation, energy and technology.
The package includes a provision requiring
materials purchased with funds from the bill to be U.S. made,
a development that brought criticism from trading partners around the
The language was softened, and now includes a requirement that
the provision be implemented consistent with U.S. international trade
The final deal included a $5.3 billion
tax break that allows corporations to speed up deductions for
investments in plants and equipment, and another allowing small businesses
to deduct business expenditures of up to $250,000 directly from their
The deal brought opposition from Republicans,
who mostly said they had been shut out of the closed-door
On the Democratic side, Sen. Tom Harkin (D-Iowa) was
upset about the way he said Democrats gave in to Republican demands
on trimming the size of the package, including its school construction
spending and aid to states. “I think we . . . gave in too much
in order to appease a few people,” he said, referring to Republican
Sens. Susan Collins and Olympia Snowe of Maine, and Sen. Arlen Specter
of Pennsylvania, the three moderates whose votes will be needed for
Senate adoption of a conference report.
President Obama in a statement thanked
Democratic and Republican lawmakers for achieving “a hard-fought
A White House blog on the subject noted that the bill
did not include everything the president wanted, particularly with regard
to education funding, and it suggested that the effort to enact a massive
stimulus package could already be bearing fruit with recent announcements
by some companies that they were planning to hire.
Impacts. The Congressional
Budget Office (CBO) said Wednesday that the House and Senate stimulus
bills could significantly boost the economy and create millions of jobs
in the next few years. Averaging the effects of the two chamber-passed
bills, which CBO said were broadly similar, CBO said the stimulus proposal
could boost GDP by between 1.4 percent and 3.8 percent for the remainder
of calendar year 2009, between 1.1 percent and 3.3 percent by the end
2010, and between 0.4 percent and 1.3 percent by the end of 2011. Most
the bill’s spending is expected to occur in the first two years.
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