House-passed economic stimulus likely to undergo significant change in Senate

By Curt Anderson

Associated Press

WASHINGTON – The $100 billion economic stimulus package passed by the House is likely to undergo significant change in the Democratic-led Senate, where far greater support exists for additional spending and far less for cuts in business taxes.

More aid for the unemployed, including federal help with laid-off workers’ health insurance premiums, and up to $20 billion in spending on homeland security and infrastructure items are among proposals gaining ground in the Senate.

The House bill, passed Wednesday by a wafer-thin 216-214 margin, comprises almost entirely tax cuts. President Bush says he is willing to negotiate with Democrats but does not want a stimulus plan composed mostly of new spending.

And he wants the package quickly.

“We need a stimulus, and we need it now,” Treasury Secretary Paul O’Neill said.

Nevertheless, the Senate is extremely unlikely to take up its version before next week at the earliest. The majority leader, Sen. Tom Daschle, D-S.D., has said he expects to have a bill to the president by Thanksgiving.

Daschle told reporters Thursday that no decisions have been made on when or how to proceed but that efforts will continue behind the scenes as the Senate works on regular government spending bills next week. Daschle said the stimulus plan is not “as front-burner an issue” as the appropriations bills.

Bush praised four main elements in the House bill, which costs $99.5 billion in 2002 and $159 billion over 10 years. They include a new round of tax rebates for people who didn’t get a check earlier this year; repeal of the corporate alternative minimum tax; enhanced expensing write-offs for business capital assets; and acceleration of the cut in the 27 percent individual income tax rate so it falls to 25 percent in 2002, four years earlier than under current law.

The trick to coming up with an acceptable formula will be to find middle ground, said Sen. John Breaux, a Louisiana Democrat who co-chairs a pivotal band of Senate moderates. Breaux said Republicans will oppose broad new entitlement spending, and Democrats don’t favor the House tilt toward corporate tax cuts.

“Unless we have a bipartisan package, we won’t be able to get a bill out of the Senate,” Breaux said.

The close House vote, largely along party lines, came after hours of noisy debate reflecting the deep political divide on economic policy. It was a departure from the congressional unity on other matters since the Sept. 11 terror attacks. Seven Republicans voted against the bill; three Democrats voted for it.

“It officially shatters the myth of bipartisanship,” said Rep. Charles Rangel, D-N.Y.

Undeterred, Republicans said the legislation was the ideal way to encourage renewed business investment, stop job layoffs and boost consumer confidence in time for the holiday shopping season.

“Investment is the driving engine in the economy,” said House Majority Leader Dick Armey, R-Texas. “This bill provides a reward for the risk-takers who create jobs in America.”

Democrats sharply disagreed, accusing Republicans of assembling a package that favors the wealthy and big corporations over laid-off workers and threatens to trigger deep future budget deficits. Senate Democrats are certain to make major changes, most likely to give greater aid to the unemployed and fewer business tax cuts.

“The workers who have lost their jobs get bread crumbs from this bill,” said House Minority Leader Dick Gephardt, D-Mo.

In addition to the four elements praised by Bush, key items in the House bill would effectively cut long-term capital gains tax rates from 20 percent to 18 percent for most taxpayers, give major corporations refunds of alternative minimum taxes they paid up to 15 years ago and allow companies to deduct current operating losses from taxes they paid up to five years earlier.

Even though there remains considerable bipartisan support for some of the tax items, Democrats said the measure’s $12 billion in grants to states was far too little to tackle the growing unemployment problem.

They proposed an alternative that would have added 26 weeks of unemployment benefits and provided a 75 percent federal match for COBRA health insurance available to laid-off workers, but it was defeated on a 261-166 vote.

Senate Democrats have made similar proposals, and the Appropriations Committee chairman, Sen. Robert C. Byrd, D-W.Va., outlined a $20 billion package of homeland security spending that includes accelerated purchase of vaccines, transportation security measures, nuclear plant safety and safe drinking water.

Byrd said these measures would address Americans’ “fears about future terrorist attacks” and encourage them to resume normal lives.

Bush demurred. Appearing at a Maryland printing plant Wednesday, he echoed House Republicans in repeating that the $60 billion in spending already approved by Congress for recovery and war efforts was enough. “I strongly believe it’s time to balance this amount of spending with additional tax relief,” the president said.

Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Customers enter and exit the Costco on Dec. 2, 2022, in Lake Stevens. (Olivia Vanni / The Herald)
Costco stores could be impacted by looming truck driver strike threat

Truck drivers who deliver groceries and produce to Costco warehouses… Continue reading

Two Washington State ferries pass along the route between Mukilteo and Clinton as scuba divers swim near the shore Sunday, Oct. 22, 2023, in Mukilteo, Washington. (Ryan Berry / The Herald)
Ferry system increases ridership by a half million in 2024

Edmonds-Kingston route remains second-busiest route in the system.

Alina Langbehn, 6, center, and Vera A., 6, right, sit on a swing together at Drew Nielsen Neighborhood Park after school on Tuesday, Jan. 28, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Everett council votes to renovate Drew Nielsen Park

Construction on the $345,000 upgrade could start as early as this fall.

Northshore School District bus driver Stewart O’Leary pictured next to his buses shattered drivers side windshield on Friday, Feb. 14, 2025 in Bothell, Washington. (Olivia Vanni / The Herald)
‘Put me in, coach’: Bus driver back at work after struck by metal bar

Stewart O’Leary, a Northshore employee, has received national attention for his composure during a frightening bus trip.

Lynnwood councilor Joshua Binda speaks during a Lynnwood City Council meeting on Wednesday, Nov. 20, 2024. (Olivia Vanni / The Herald)
Does the Lynnwood Council VP live in Lynnwood? It’s hard to say.

Josh Binda’s residency has been called into question following an eviction and FEC filings listing an Everett address. He insists he lives in Lynnwood.

Robin Cain with 50 of her marathon medals hanging on a display board she made with her father on Thursday, Jan. 2, 2025 in Lake Stevens, Washington. (Olivia Vanni / The Herald)
Running a marathon is hard. She ran one in every state.

Robin Cain, of Lake Stevens, is one of only a few thousand people to ever achieve the feat.

People line up to grab food at the Everett Recovery Cafe on Wednesday, Dec. 4, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
Coffee, meals and compassion are free at the Everett Recovery Cafe

The free, membership-based day center offers free coffee and meals and more importantly, camaraderie and recovery support.

The Everett Wastewater Treatment Plant along the Snohomish River on Thursday, June 16, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Everett water, sewer rates could jump 43% by 2028

The rate hikes would pay for improvements to the city’s sewer infrastructure.

The bond funded new track and field at Northshore Middle School on Thursday, Oct. 24, 2024 in Bothell, Washington. (Courtesy of Northshore School District)
Northshore School District bond improvements underway

The $425 million bond is funding new track and field complexes, playgrounds and phase one of two school replacements.

An American Robin picks a berry from a holly tree on Thursday, Feb. 13, 2025 in Edmonds, Washington. (Olivia Vanni / The Herald)
Calling all birders for the annual Great Backyard Bird Count

The Audubon Society will hold its 28th annual Great Backyard… Continue reading

A view of one of the potential locations of the new Aquasox stadium on Monday, Feb. 26, 2024 in Everett, Washington. The site sits between Hewitt Avenue, Broadway, Pacific Avenue and the railroad. (Olivia Vanni / The Herald)
Initial prep work for AquaSox stadium to start, with $200k price tag

The temporary agreement allows some surveying and design work as the city negotiates contracts with designers and builders.

Aaron Kennedy / The Herald
The Joann Fabric and Crafts store at 7601 Evergreen Way, Everett, is one of three stores in Snohomish County that will close as part of the retailer’s larger plan to shutter more than half of its stores nationwide.
Joann store closure plan includes Everett, Arlington, Lynnwood locations

The retail giant filed a motion in court to close approximately 500 stores in the U.S.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.