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Economic Stimulus Slows in the Senate

January 31, 2008 - by Donny Shaw

(Updated below)

The Senate Finance Committee passed their economic stimulus proposal yesterday by a vote of 14-7, with only 3 of 10 Republicans on the Committee voting in favor. It total $157 billion, about $10 billion more than the House-passed version, and proposes slightly smaller individual tax rebates than the House. But it would increase spending in a couple of areas that the House bill does not. The amount of time recently laid-off individuals would be eligible for unemployment insurance benefits would be lengthened by up to 13 weeks by the bill, a 50 percent increase beyond the current limit. It also directs about $6 billion in tax breaks specifically to the renewable energy industry. Proceed to OMB Watch for a more detailed rundown.

After the poor showing of Republican support in the Finance Committee (a stark contrast to the bipartisanship that characterized the House’s work on their stimulus bill), Senate Democrats are already looking ahead, and doing so publicly, to how they will proceed once they fail to move their package in front of the full Senate. Congressional Quarterly has the scoop on how Majority Leader Harry Reid (D-NV) is planning to proceed when this comes to the floor sometime next week:

>If the Finance version fails, Democrats would then offer three separate amendments to the House bill. The first would include extended unemployment benefits, mortgage revenue bonds, food stamps and other measures.
>Next would come a vote on expanded low-income heating assistance, a popular program among senators.
>Then, the Senate would vote on adding rebate checks for low-income seniors and disabled veterans, who don’t qualify under the House bill because they did not have $3,000 in wage income in 2007 or enough taxable income.
>Finally, the Senate would vote on the House bill — with amendments, if any are adopted, or as is. The latter vote would send the bill straight to President Bush. Amendments would force negotiations with the House and White House on a final version.

The key question that will be pervasive in the Senate’s deliberations is what, in the end, will be more effective in holding back a recession: getting money into the hands of consumers as quickly as possible in the form of tax rebates, or taking more time and coupling smaller tax rebates with increased spending on social programs directed largely at the poor and unemployed. The Senate bill is being officially introduced today — as soon as it’s got a number and we’ve got a bill page for it, we’ll post a link to it on this blog.

UPDATE: Robert Greenstein at the Center for Budget and Policy Priorities writes that, “the earliest the IRS can begin to send out rebates is mid-May,” so as long as the Senate pases the stimulus bill by mid-March, their deliberations “will not delay the rebates by a single day.”

And he adds this interesting twist to the debate over speed-first approach to enacting a stimulus bill:

>In fact, the stimulus package the Senate Finance Committee approved yesterday would accelerate the delivery of stimulus rather than retard it, because it includes extended unemployment benefits. Those benefits could begin reaching unemployed workers and being injected into the economy in 30
days — i.e., by mid-March, some two months before the first rebate checks would go out.

Pictured above are Finance Committee Chairman Max Baucus (D-MT) and Ranking Republican Charles Grassley (R-IA) at yesterday’s mark-up session.

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