President Bush and Treasury Secretary Henry Paulson held a press conference yesterday in an effort to head off modifications to the financial stimulus package in the Senate. They had already agreed upon a deal with leaders of the House.
But Sen. Max Baucus (D., Mont.), chairman of the Senate Finance Committee, threw a wrench in the works last night. The committee passed a modified version of the stimulus plan by a bipartisan vote of 14 to 7, which could cause a potential delay in the approval of the package.
Baucus touted his modifications to the plan in a
"America's seniors have worked hard all their lives, and they contribute to our economy today. This package will put rebates into the hands of 20 million additional American seniors, plus lower-income payroll taxpayers and disabled veterans -- all of whom will spend this money quickly and give our economy the shot in the arm it needs."
The plan boosts the amount of money going to taxpayers earning more than $3,000 in wages from $300 in the House plan to $500. This would aid seniors on Social Security, disabled veterans or those with net self-employment income. This would dramatically increase the number of people receiving funds. The plan, however, caps the upper-income earners at $150,000 and families filing jointly at $300,000.
The plan also extends unemployment insurance benefits for 13 weeks in all states through 2008 and tacks on another 13 weeks for states at risk of high employment.
The plan also aids businesses. Companies losing money from the downturn will be able to extend applying losses retroactively from two years to five years, or "net operating loss (NOL) carryback."
Many Democrats and economic observers had criticized the Paulson plan for not creating more immediate stimulus. One critic of the plan was OMB Watch, a not-for-profit watchdog organization on budget issues and public access, which said:
"Economists as ideologically diverse as Harvard professors Lawrence Summers and Martin Feldstein agree that an appropriately designed stimulus package should be restricted to elements that will contribute cash directly and immediately to those with the greatest propensity to spend it on consumer items, so as to maximize the stimulative effect on the economy."
The battle lines are drawn. It remains unclear who will blink first, Baucus or Bush.