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 soon 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.”
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 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.
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.