WASHINGTON — The Senate's tax-writing panel on Friday unveiled $275 billion in proposed tax cuts and credits to be put into President Barack Obama's stimulus plan to jolt the moribund U.S. economy back to life.
The Senate Finance Committee's economic recovery legislation incorporates much of what the tax-writing panel in the House of Representatives passed earlier this week. It added some provisions desperately sought by corporate America, however, and would waive tax collection on unemployment benefits extended to millions of out-of-work Americans.
The Senate legislation also would provide one-time payments of $300 to Americans who are collecting Social Security or disability checks from the government.
"This country is in a world of economic hurt, and Congress has to act boldly now to stabilize the situation," Sen. Max Baucus, D-Mont., the chairman of the Finance Committee, said in a statement introducing his legislation.
Baucus announced his measure shortly after top Democrats and Republicans in Congress met with Obama. The new president appealed for quick action in Congress, and Republicans, now the opposition in both chambers, have pledged not to obstruct legislation that economists say is vital to arresting the economic slide.
"I do think we will be able to meet the president's deadline of getting the package to him by mid-February," Senate Minority Leader Mitch McConnell, R-Ky., said after meeting with Obama.
House Minority Leader John Boehner, R-Ohio, called the meeting with Obama "very productive."
Asked what input Republicans have had in any legislation, though, Senate Majority Leader Harry Reid, D-Nev., said: "I think the main thing that the Republicans (asked) for, and they're getting, is to be involved in the process."
Obama agreed to meet with Republican lawmakers next week to hear their suggestions.
The Senate tax bill, like the House version, incorporates Obama's Make Work Pay proposal, giving back $500 to most individual tax filers and $1,000 to most joint filers through a temporary holiday in collection of some payroll taxes.
Obama says that the Make Work Pay idea puts more money into the pockets of 95 percent of Americans, but Republicans want the 5 percent with the highest incomes to get something back too. They propose reducing the two lowest tax brackets by 5 percent; because tax is assessed on the amount of an individual's income that falls into each bracket, those lower rates would apply even for those who earn more.
"Rather than spending too much, too late, as the congressional Democrats' proposal does, our proposals let the American people keep more of what they earn to spur investment, encourage savings and create more private-sector jobs," Boehner said in a statement.
Independent economists think that both the Democratic and Republican plans could do more to spur investment. For example, neither party is proposing much in tax breaks for spending on big things such as cars or home improvements. By front-loading the tax breaks, or requiring spending in order to get the tax benefit, consumers and troubled sectors of the economy each would be helped.
"Those kinds of things would help those kinds of distressed industries," said Nariman Behravesh, chief economist for economic forecaster IHS Global Insight in Lexington, Mass. "I would rather see targeted tax incentives and cuts that are tied to spending. That is the missing part of this (economic) puzzle."
The Senate bill includes a pro-business tax provision called bonus depreciation, which would allow companies accelerated write-offs of existing equipment and inventory if they make new purchases.
The Senate version also incorporates a complicated but important provision that the U.S. Chamber of Commerce and other business groups are pushing. This measure, which isn't in the House bill, would allow some companies to reduce taxes if they buy down their debt between late 2008 and 2011. The idea is to encourage companies to lower their debts, a process called de-leveraging, and thus get in better shape for an eventual economic recovery.
"We're very encouraged," said Bruce Josten, the vice president of government affairs for the Chamber of Commerce. "The specific purpose . . . is to create an incentive on a very short-term basis to have an orderly process to de-leverage that debt and strengthen their balance sheets."
The Senate Finance bill is being proposed in tandem with another bill that would involve about $180 billion in spending for health, unemployment benefits and other social programs. It includes $87 billion in assistance to states for programs such as Medicaid. Republicans want to make some of that state aid loans that must be repaid.
The House and Senate bills include a $7,500 tax credit for first-time homebuyers who purchase homes in the first half of this year. This wouldn't have to be repaid.
The Senate bill is more expansive for energy production and environmental preservation efforts than the House legislation is, dedicating to that cause $31 billion in tax credits and incentives versus $20 billion in the House version.
(Halimah Abdullah contributed to this article.)
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