Democratic and Republican congressional leaders reached a tentative deal today on tax rebates of $300 to $1,200 per household and business tax cuts to jolt the slumping economy.
Congressional officials close to the negotiations said House Speaker Nancy Pelosi and Republican Leader John Boehner of Ohio reached agreement in principle in a telephone call Thursday morning.
The officials, speaking on condition of anonymity, said the two wanted key members of their parties to sign off on the accord before any announcement.
The development came as the Bush administration, which also has been pushing for a deal, said agreement seemed imminent. "Our understanding is there is no final deal yet but they are making progress," presidential spokeswoman Dana Perino said early this morning.
Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits during a Wednesday meeting in exchange for gaining rebates of at least $300 for almost everyone earning a paycheck, including low-income earners who make too little to pay income taxes.
Pelosi, answering questions from reporters today after a speech in Washington, said, "I am not confirming anything." But Pelosi added she would have something to say later.
Under the tentative plan, families with children would receive an additional $300 per child, subject to an overall cap of perhaps $1,200, according to a senior House aide who outlined the deal on condition of anonymity in advance of formal adoption of the whole package. Rebates would go to people earning below a certain income cap, likely individuals earning $75,000 or less and couples with incomes of $150,000 or less.
Workers would have to have earned at least $3,000 in 2007 to receive the rebates, the officials said.
The cost of the final business tax break package was uncertain. The two leaders agreed to allow businesses to immediately write off 50 percent of purchases of plants and other capital equipment and to permit small businesses to write off additional purchases of equipment. It appeared that a provision to allow businesses suffering losses now to reclaim taxes previously paid might be dropped to reduce the cost of the business package.
Sen. Max Baucus, D-Mont., scheduled a meeting of the Senate Finance Committee for next week to discuss the stimulus package.
"The Senate will want to speak, as well," Baucus said, adding that he and Sen. Charles Grassley of Iowa, the panel's senior Republican, had "agreed to work together, move quickly, and mark up economic stimulus legislation next week."
President Bush has supported larger rebates of $800-$1,600, but his plan would have left out 30 million working households who earn paychecks but don't make enough to pay income tax, according to calculations by the Urban Institute-Brookings Institution Tax Policy Center. An additional 19 million households would receive only partial rebates under Bush's initial proposal.
To address the mortgage crisis, the package also allows Fannie Mae and Freddie Mac &
government-sponsored companies that are the two biggest U.S. financers and guarantors of home loans &
to buy home mortgages much larger than the current $417,000 limit. Rep. Barney Frank, D-Mass., and chairman of the House Financial Services Committee, said that lending cap might reach as high as $700,000 in areas with the highest home prices.
After a key Wednesday night meeting in which the parameters of an agreement were reached, Pelosi and Boehner spoke again today to cement the accord.
In the talks, Pelosi pressed to make sure tax relief would find its way into the hands of lower-income earners while Boehner pushed to include upper middle-class couples, according to congressional aides.
The emerging package was already drawing fire from liberal activists and labor unions upset that proposals to extend unemployment insurance and boost food stamps had been dropped. They said those ideas could pump money into the economy more quickly than tax rebate checks that won't be delivered until June.
Conservative Republicans were likely to be restless over tax rebates going to those without income tax liability.
Democratic aides said greater GOP flexibility over giving relief to poor families with children &
who would not have been eligible under Bush's original tax rebate proposal &
was the catalyst that moved the talks forward.
Pelosi's decision to drop expanding unemployment payments and more money for food stamps &
which many lawmakers had assumed would be included in the package &
is controversial with Democratic constituencies, who were already stung by a decision to deny states more money for their Medicaid programs.
Many Democrats had pressed to extend unemployment benefits for people whose 26 weeks of benefits have run out, but Republicans resisted.
Congress inks stimulus package