Senate Moves Forward With Economic Stimulus Package

An economic aid plan to send rebates of $600-$1,200 to most taxpayers passed a key test Monday in the Senate, where Democrats are pushing to add more than $40 billion in help for seniors, disabled veterans and the unemployed.

Democrats were ratcheting up pressure on Republicans to support the add-ons, part of a proposal to pump $204 billion into the economy over the next two years. The House passed its $161 billion economic stimulus package last week with overwhelming backing from both parties.

The Senate voted 80-4 Monday evening to advance that package, setting the stage for a test-vote as early as Wednesday on Democrats' much larger proposal.

The Senate measure would send $500-$1,000 rebates to a wider group of people than the House measure covers, add $14.5 billion in jobless benefits and include $5.6 billion in renewable energy tax breaks over the next 10 years. The rebates would extend to 20 million senior citizens and 250,000 disabled veterans left out of the House bill because they don't earn enough to qualify.

Senate Majority Leader Harry Reid, D-Nev., said last week that the Senate plan didn't have enough support to advance, but on Monday he said a new proposal that includes $1 billion in heating aid for the poor and a housing rescue package included in the House bill could pass and be enacted quickly.

"All Americans should know that their rebate checks will not be delayed a single minute as a result of our debate," Reid said.

Lobbyists for the elderly, labor unions and homebuilders — among other politically potent groups — were blanketing Capitol Hill in search of votes for the Senate plan.

"There's been a lot of politicking around here about the economic stimulus package," said Sen. Max Baucus, D-Mont., who wrote the Senate measure, approved last week by the Finance Committee. "Everyone's counting votes."

Baucus, the Finance chairman, predicted his plan would have the 60 votes necessary to advance over objections by top Republicans, who have joined President Bush and House leaders in calling for the Senate to quickly endorse the narrower House-passed plan so it can be enacted quickly.

Jim Nussle, Bush's budget director, said that Bush believes the House bill is the right size, although he refused to say whether the president would veto a larger stimulus bill.

"There is concern about the Senate adding spending proposals to a package that thus far has been bipartisan, has been something that could be done quickly, that would have good, strong stimulative effect on the economy short term, and that shouldn't be loaded up with a lot of spending proposals at this time," Nussle told reporters as he detailed Bush's 2009 budget.

"Nobody in this city wants to be responsible for holding this thing up," Baucus said, appearing at a news conference in the Capitol with senior citizens and representatives for the AFL-CIO and disabled veterans.

Democrats, trolling for support, were targeting GOP senators facing re-election battles, including Sens. Norm Coleman of Minnesota, Elizabeth Dole of North Carolina, Ted Stevens of Alaska, and John Sununu of New Hampshire. They also expected backing from Maine Republicans Susan M. Collins and Olympia J. Snowe as well as Sen. Gordon H. Smith, R-Ore.

They were hoping the combination of help for senior citizens and disabled veterans, a 13-week unemployment extension for those whose benefits have run out, and heating aid would prove a politically irresistible proposition for Republicans.

Sen. Arlen Specter, R-Pa., said he backed extending unemployment benefits and providing heating aid, but had not yet decided whether to support the broader package.

"I'll take a look," Specter said.

Reid threatened that the package would be senators' last chance to vote for those popular items.

"If the package does not pass, that's the end of the line. That will be it," Reid said.

Some Democrats, though, were unhappy that food stamps were not included in the new proposal.

"I don't know how Democrats can look themselves in the mirror if they walk away from food stamps," said Sen. Tom Harkin, D-Iowa.

Despite the rancor surrounding the measure, it appeared virtually certain that some form of stimulus measure would pass the Senate. But the debate was shaping up as a marked contrast to the one in the House, where Speaker Nancy Pelosi, D-Calif., teamed with Minority Leader John Boehner, R-Ohio, in a rare burst of bipartisanship to speed the more limited package to passage.

In a CNN-Opinion Research Corp. poll released Monday, seven in 10 respondents said they think the stimulus package does not do enough to improve economic conditions. About two-thirds said they believe the country is in a recession.

In the same survey, taken Feb. 1-3, the economy was cited as the most important factor by far that voters will consider in choosing a presidential candidate this year. Forty-four percent named the economy, more than double the number who picked the war in Iraq, which was mentioned second most.

Lobbying intensified on the measure Monday. Democrats invited seniors to Capitol Hill to make a personal plea to senators.

"Include us" in the rebate, Mattie Carvon, 84, of Washington, said at the news conference with Baucus. "We need it to live. It's only fair."

Homebuilders were pressing for approval of the Senate plan because it includes one of their top priorities: a tax break that allows businesses suffering losses now to reclaim taxes previously paid. It costs $16.5 billion over the next two years.

Both packages provide tax incentives for businesses to invest in new plants and equipment, but the Senate measure scales back significantly a measure allowing companies to write off the purchases more quickly.

Labor unions also were lobbying for the Senate version, armed with new data released Friday showing that U.S. employers cut jobs last month for the first time in more than four years.

"Given the economic news from last week, it will be more difficult for Republicans to vote against this," said William Samuel, the AFL-CIO's legislative director.

And renewable energy producers were working to win adoption of the tax breaks for their industry. The package includes a measure that allows coal producers to get refunds for taxes imposed on their exports.

The bill also adds $10 billion in tax-exempt mortgage revenue bonds to help homeowners refinance subprime loans.

Along with the heating aid, the new proposal set for a test-vote adds measures included in the House-passed bill to increase the availability of large mortgages and allow those holding subprime loans to refinance. It would raise the limit on Federal Housing Administration loans and the cap on loans that Fannie Mae and Freddie Mac can buy to $729,750.