Rebates for wealthy falters in Senate

WASHINGTON The move by Finance Committee Chairman Max Baucus to limit rebates of $500-$1,000 to low- and middle-income people came as a senior Senate Republican Wednesday swung behind his plan, which also adds help for seniors living on Social Security and the unemployed to the stimulus package that passed the House Tuesday.

"We are putting back the cap," said Baucus, D-Mont.

Sen. Charles Grassley of Iowa, the senior Republican on the Finance Committee, said Wednesday morning he will support Baucus' bill to pump $196 billion into the economy over the next two years. The committee was to vote on the bill later Wednesday and the measure was expected to reach the floor promptly.

"It's going to be presented as a bipartisan (bill)," Grassley said.

Baucus originally wanted to let even the richest taxpayers share in the rebates, saying that would attract Republican support for his measure. Grassley said earlier Wednesday that including them in the rebates was a key reason he was backing Baucus' bill.

But the House excluded people with high incomes from the rebates in its bill and Senate Democrats also had balked at the idea of wealthy people getting rebate checks.

Baucus is pushing a proposal to add $35 billion to the House-passed bill to let senior citizens in on the rebates and extend unemployment benefits. It would shrink the rebate to $500 for individuals and $1,000 for couples.

In backing the bill, Grassley broke with President Bush and Senate GOP Leader Mitch McConnell, R-Ky. Both have said the Senate should simply pass the House-passed stimulus measure.

Grassley told Iowa reporters that he believed the Senate would act quickly on the measure and that he and Baucus would team up to try to block further amendments to the bill.

"If Baucus and I can work together, we can keep amendments down, keep it from becoming a Christmas tree," Grassley said.

The bipartisan Senate package faced challenges from the left and right. Democrats and some Republicans said Wednesday they would move to add money for food stamps and heating aid to the poor.

White House deputy press secretary Tony Fratto, traveling on Air Force One to California with President Bush Wednesday, said the disappointing fourth quarter growth rate should give the Senate greater urgency to pass the bill.

"We'd like to see some leadership that will encourage members to put away some of their pet ideas and think about the bigger picture," Fratto said.

Grassley said he does not personally support $14 billion in additional unemployment insurance for workers whose benefits have run out, but that he was willing to go along in exchange for Democratic concessions such as eliminating the House-passed provision phasing out rebates for individuals and couples making more than $75,000-$150,000.

Grassley also praised the measure for giving rebate checks to 20 million senior citizens living on Social Security. The House measure would leave out many seniors unless they earn a paycheck or pay income taxes on their non-Social Security income.

Baucus' measure extends unemployment payments for 13 weeks for those whose benefits have run out, with 26 more weeks available in states with a 6.5 percent jobless rate or higher. His initial proposal would have provided the longer extension for any state whose unemployment rate exceeded 6 percent, but the trigger was raised to control the cost of the package. Only Alaska, Michigan, Mississippi and South Carolina have jobless rates of 6.5 percent or more.

The Senate plan would restore a business tax break dropped during the House negotiations that would permit corporations suffering losses now to reclaim taxes previously paid.

Both packages include roughly $50 billion worth of tax incentives for businesses to invest in new plants and equipment.


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