WASHINGTON - The chairman of the Senate Finance Committee yesterday unveiled a rival plan to stimulate the economy, offering a $500 check to virtually every American - including low-income seniors and rich financiers - in a direct challenge to the bipartisan deal reached last week by President Bush and House leaders.
The $156 billion measure by Senator Max Baucus, Democrat of Montana, which will be drafted formally by the committee tomorrow, also would extend unemployment benefits for the long-term jobless by 13 weeks, a proposal that had been rejected by Bush and House Republican leaders as they crafted their $150 billion stimulus package.
That compromise, unveiled last week, proposed to cap income eligibility for somewhat larger tax rebates at $75,000 for individuals and $150,000 for couples.
With the strong backing of Senate majority leader Harry M. Reid, Democrat of Nevada, the package that emerges from the Finance Committee is likely to pass the Senate, forcing House-Senate negotiations that Bush and House leaders had hoped to avoid. The House is expected to approve its stimulus plan today.
"Rebates for seniors and payroll taxpayers, extended unemployment insurance, and tax relief for struggling businesses will put more cash into the American economy right away," Baucus said. "The White House says we mustn't slow the economic stimulus agreement down, or blow it up. I agree. We're going to improve it and get it passed right away."
Baucus's proposal is only the start of revisions. Senators on the Finance Committee and their colleagues have promised to add heating assistance for the poor, more food-stamp money, and additional business tax incentives.
"This is a package in sync with the House bill but stronger and broader," said Senator Charles E. Schumer of New York, a member of the Democratic leadership. "Once the package gets to the floor, I will make an effort to add $500 million of emergency foreclosure-prevention funding. The housing crisis is at the heart of the economic slowdown, and more must be done about it."
House Democratic and Republican leaders largely held their tongues, refusing to speculate on how much the Senate's efforts could slow down their efforts to fast-track the stimulus plan. "Everything that I've heard coming out of the Senate seems to be timely, temporary, and targeted," said House Speaker Nancy Pelosi, Democrat of California.
But privately, House leaders were fuming. In difficult negotiations last week, they extracted the income caps as a key concession, allowing them to secure rebates for workers who earn too little money to pay income tax and to set rebate checks for middle-income workers at $600 for individuals and $1,200 per couple.
House Ways and Means Committee Chairman Charles Rangel, Democrat of New York, said last night that Baucus and the Senate were on "thin ice" with the new plan. "By eliminating the income cap, we would only further grow the divide between rich and poor that has already grown so much under President Bush's tax policies," Rangel said. "I am concerned that this expansion would jeopardize the entire stimulus package."
Baucus's proposal would increase the size of payments to the poorest workers, to $500 from the House's $300, and would include poor seniors by extending eligibility to anyone who receives $3,000 in Social Security income. But middle-income taxpayers would pay a price, losing $100 in payments to individuals or $200 in payments to couples. Almost all taxpayers would still receive $300 per child younger than 17.
Baucus said he eliminated the income cap to simplify the rebate structure. House Democratic leadership aides grumbled that Baucus was watching out for the interests of the rich, as he did in Bush's first term.
Besides shrinking the size of some payments, the Finance Committee also would save money by slightly decreasing the incentives for business investment. But House leaders and tax writers were skeptical yesterday that the Baucus plan could offer all those measures for the $156 billion price tag he put on his bill.
"I don't buy it," said Rahm Emanuel, House Democratic Caucus Chairman of Illinois who helped negotiate the House package.
The cost of either plan would be tacked onto this year's federal budget deficit, and if the price tag rises much higher, House leaders fear the Senate will court a presidential veto.
To keep the package on a fast track, Reid plans to put the House-approved bill onto the Senate floor, then allow Baucus to replace it with the Finance Committee version.
