WASHINGTON — Senate Democrats, under pressure from party colleagues in the House, agreed Thursday to an economic rescue package that would add checks for Social Security retirees and disabled veterans but leave out extended jobless benefits and additional business subsidies.
The package would rush tax rebates of $500 for individuals and $1,000 for couples to most taxpayers and grant business tax cuts to revive the economy.
Leaders in both parties and in both chambers of Congress had agreed by Wednesday night on the idea that 20 million seniors whose sole or main income is Social Security and 250,000 veterans living off disability benefits should be added to those getting rebates under the $161 billion stimulus bill first negotiated by House Democrats and President Bush.
But Senate Democrats had refused a vote on the idea unless piggybacked on top of it were 13 weeks of added jobless benefits, home heating subsidies, and new tax refunds for coal producers and struggling corporations.
Now, Democratic senators are backing away from those demands, paving the way for a vote as early as Thursday.
“Discretion is the better part of valor. The best thing for us to do is declare a big victory that we’ve achieved, namely getting the rebate checks to 20 million seniors and 250,000 disabled veterans,” said Senate Finance Committee Chairman Max Baucus, D-Mont.
All of those measures plus the rebates for seniors and veterans would have boosted the stimulus package’s total cost to $205 billion, an amount sure to have produced a record federal deficit this year.
Supporters say sharing the rebates with seniors and disabled veterans will cost about $9 billion.
The retreat by Senate Democrats came after House Speaker Nancy Pelosi sided with Republicans, including GOP Senate Leader Mitch McConnell of Kentucky, and called on the Senate to stop its infighting and pass the bill.
In doing so, Pelosi, D-Calif., split openly with Senate Majority Leader Harry Reid, D-Nev., who backed the more expensive package.
“There’s no reason for any more delay on this,” Pelosi said Thursday before agreement was reached.
Reid on Wednesday narrowly lost a crucial procedural vote to push the $205 billion Senate Democratic stimulus plan — as a take it or leave it proposition — toward a final vote in that chamber. Eight Republicans, including a handful who helped craft the measure, voted with Democrats.
Later, Pelosi issued a statement tailored to support McConnell’s position — which Reid has repeatedly rejected — and pointedly ignoring the other add-ons.
Pelosi said House lawmakers are “very receptive to additions to our bill which ensure that disabled veterans and additional seniors are eligible” for rebate checks and want to make sure illegal immigrants are denied them. If the Senate doesn’t approve the additions, she said, the House will.
But Pelosi did not endorse Senate add-ons pushed by Reid, such as provisions benefiting coal companies and a 13-week extension of jobless benefits. The unemployment insurance provision could advance through the House as a separate measure after the stimulus measure passes.
A Pelosi aide said she is particularly unhappy with a Senate provision that allows coal producers to get about $300 million worth of refunds for taxes imposed on their exports.
Republican leaders objected to add-ons such as a $14.5 billion unemployment extension for those whose benefits have run out, $1 billion in heating aid for the poor and a package of tax breaks for renewable energy producers.
The House-passed bill would provide $600-$1,200 checks to most taxpayers and tax breaks to businesses investing in new plants and equipment.
The original Senate version would have provided checks of $500-$1,000 to a broader group that includes elderly people living on Social Security, disabled veterans and taxpayers making up to $150,000 for singles — or $300,000 for couples.
It would have extended unemployment benefits for an additional 13 weeks for those whose benefits have run out, with 13 more weeks available in states with the highest jobless rates. The bill also included $10 billion in tax-free mortgage revenue bonds to help homeowners refinance subprime loans.
Reid denied Republicans an opportunity to offer changes to the measure, provoking a GOP filibuster on Wednesday. Reid fell just one vote short of the 60 votes required to send the bigger Democratic plan toward a final vote. The final tally was 58-41, however, after Reid changed his vote to “nay” in order to be able to call a revote under Senate rules.
The calculus was that enough Republicans would relent in the face of political pressure to support unemployment insurance and heating aid to join Democrats and force the measure through.
“We didn’t block the proposal,” McConnell said. “We just said there’s a better way to go and there’s an alternative.”
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