The voices of Tax Policy Center's researchers and staff
Well, it could have been worse.
President Bush and House leaders say they have cut a deal on a $150 billion stimulus package—about $100 billion for families and individuals and about $50 billion for businesses. The centerpiece of the plan: a cash payment of at least $300 for most wage earners, along with an additional $300 per child.
But, like everything else in Washington these days, this plan is not simple. Workers who earned less than $3,000 last year would get nothing. Those who paid at least $300 in income taxes would get checks from $300 to $600 ($1200 for a couple). Those making more than $75,000 (or $150,000 for a couple) would get just a partial rebate and those making more than $87,000 would get nothing. As grandma would say, "I have such a headache."
TPC estimates that half of all tax filers—about 68 million--would get the full rebate, while about 39 million families and individuals would get no benefit. At least this structure will, more or less, get the cash in the hands of those most likely to spend it.
One big problem: the IRS probably won't be able to get the checks out until spring or summer even if Congress can pass the plan right away. And, before we all sing the last chorus of Kumbaya together, the Senate has not signed on to this deal. Finance Committee Chairman Max Baucus (D-Mt.) plans a mark-up for next week and some Senate Democrats already are saying they want to add extended unemployment benefits and food stamps to the package.
If getting money into the economy quickly is your goal, boosting food stamps is probably the fastest way to do it. But it will be interesting to see how hard Democrats fight for it.
The most important proposal in the whole package has nothing to do with taxes. It would raise the limit on Federal Housing Administration loans and hike the cap on conforming FannieMae and FreddieMac loans from $417,000 to $625,500. These changes may help free up the now-frozen mortgage market.
The good news is that even in an election year, Bush and congressional Democrats are showing some signs that, when they want to, they actually can work together. The question is: Will this era of good feelings last long enough to get a bill signed into law?
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