WASHINGTON — Most Americans will have some extra cash to spend by summertime, thanks to quick action by Congress and the president on an economic stimulus package.
Congressional leaders announced a deal with the White House on a package that would give most tax filers refunds of $600 to $1,200, and more if they have children.
House Speaker Nancy Pelosi said Thursday that Congress would act on the agreement — hammered out in a week of intense negotiations and uncustomary bipartisanship — “at the earliest date, so that those rebate checks can be in the mail.”
President Bush praised the agreement at the White House, saying it “has the right set of policies and is the right size.”
The rebates, which would go to about 116 million families, had appeal for both Democrats and Republicans. Pelosi’s staff noted that they would include $28 billion in checks to 35 million working families who wouldn’t have been helped by Bush’s original proposal. Republicans, for their part, were pleased that the bulk of the rebates — more than 70 percent, according to an analysis by Congress’ Joint Tax Committee — would go to individuals who pay taxes.
Individuals who pay income taxes would get up to $600, working couples $1,200 and those with children an additional $300 per child under the agreement. Workers who make at least $3,000 but don’t pay taxes would get $300 rebates.
The first rebate payments could begin going out in May, and most people could have them by July, said Treasury Secretary Henry Paulson, noting that the IRS will already be overwhelmed processing 2007 tax returns. The rebates were expected to cost about $100 billion, and the package also includes close to $50 billion in business tax cuts.
The principal players in pulling the deal together were Pelosi, House Republican leader John Boehner and Paulson. The package would allow businesses to immediately write off 50 percent of purchases of manufacturing plants and other capital equipment and permit small businesses to write off additional purchases of equipment. A GOP-written provision to allow businesses suffering losses now to reclaim taxes previously paid was dropped.
Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits during a Wednesday meeting in exchange for gaining the rebates of at least $300 for almost everyone earning a paycheck, including those who make too little to pay income taxes.
“I can’t say that I’m totally pleased with the package, but I do know that it will help stimulate the economy. But if it does not, then there will be more to come,” Pelosi said.
Boehner said the agreement “was not easy for the two of us and our respective caucuses.”
“You know, many Americans believe that Washington is broken,” the Ohio Republican said. “But I think this agreement and I hope that this agreement will show the American people that we can fix it and will serve to move along other bipartisan agreements that we can have in the future.”
Paulson said he would work with the House and Senate to enact the package as soon as possible, because “speed is of the essence.” But he also cautioned that “the work is far from over.”
The rebates would phase out gradually for individuals whose income exceeds $75,000 and couples with incomes above $150,000, aides said. Individuals with incomes up to $87,000 and couples up to $174,000 would get partial rebates. The caps are higher for those with children.
The agreement left some lawmakers in both parties with a bitter taste, and they complained that their leaders had sacrificed too much in the interest of striking a deal. Many senior Democrats were upset that the package omitted the unemployment extension.
Senate Majority Leader Harry Reid said the goal is to send the package to the White House by Feb. 15 for Bush’s signature, but he noted the Senate would likely try to add more spending to the package.
To address the mortgage crisis, the package raises the limit on Federal Housing Administration loans from $362,000 to as high as $729,750 in expensive areas, allowing more subprime mortgage holders to refinance into federally insured loans.
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