Stimulus Proposals Gets Hefty Hikes

WASHINGTON – An economic stimulus plan meant to get the economy back on track after the Sept. 11 terror attacks got bogged down in a House committee after members started bickering about what should be included in the plan.

The president proposed a $60-$75 billion package last week, but House members have decided to use the opportunity to get their spending and tax cut priorities on the table.

House Republicans have offered a nearly $100 billion plan to boost the weak economy.  It includes millions for lower-income people to get a new round of tax rebate checks, provides states with grants to tackle unemployment and gives businesses several tax breaks.

The bill, sponsored by committee chairman Rep. Bill Thomas, R-Calif., would include $9 billion in flexible grants to states that could be used for unemployment benefits, health insurance premiums for laid-off workers and other needs.

Other items in the package include:

– 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.

– No cut in capital gains tax rates but a change in the holding period for investments so lower rates would apply on shorter-term investment.

– Acceleration of income tax rate cuts now set to take effect beginning in 2004 so that they occur in 2002.

– 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.

Democrats complained that the bill offered too many breaks for business and not enough for workers.

"Our meeting here is totally and utterly ridiculous," said Rep. Jerry Kleczka, D-Wis., "There are those who, under the guise of patriotism, will say we have to pass this bill...'to remain free'... We need to pass capital gains cuts to remain free? Shame on us!"

But Paul Ryan, R-Wis., said that the recession America is facing is an investment-led downturn.  He said that people can't lift the economy if they are living in fear, so incentives are needed to spur businesses to spend again.

"If people lose their job, they're not going to go out on a spending spree," Ryan said. 

The bill calls for acclerating tax breaks for a new round of rebates for lower income workers, those who didn't pay enough income taxes to qualify for the last rebate.  The maximum amounts would be $300 for individuals, $500 for heads of households and $600 for married couples filing jointly – identical to the previous checks.

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 also proposed a 13-week extension of unemployment benefits in hard-hit states; the House plan is likely to go further.

Democrats, however, prefer their own $110-billion stimulus plan, which includes rebate checks but adds $32 billion for projects aimed at improving security and boosting economic development.

The 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.

"There is nothing in this package that embraces our physical security," said Lloyd Doggett, D-Tex., criticizing the Republican plan.

The House is expected to vote on a stimulus plan next week, once it passes the committee hurdle. Any House bill would require approval by the Senate, which is likely to make changes.

Senate Majority Leader Tom Daschle, D-S.D., said Friday the stimulus package being debated in the House is "so far removed from the principles, I just don't know where to start."

"I'm disappointed the House is going off on all these tangents again," he said, citing capital gains taxes and other "handouts."

The Associated Press contributed to this report.