Senate Overwhelmingly OKs Stimulus Plan
Friday March 8, 11:15 am Eastern Time
WASHINGTON (Reuters) - Despite signs the U.S. recession is over, the Senate overwhelmingly passed an economic stimulus plan on Friday that extends unemployment benefits and provides billions of dollars in tax breaks to businesses.
The Democrat-controlled Senate voted 85-9 for the bill a day after the Republican-led U.S. House of Representatives overwhelmingly approved it. The measure now goes to President Bush, who said he will sign it.
Opponents said the economy has already turned around -- the jobless rate for February dropped to 5.5 percent -- and is beginning to expand. They also argue that the business tax breaks in the package will also affect revenues to cash-strapped states. Many base their business taxes on federal rules.
Supporters said the package, which will cost the Treasury $42 billion over 10 years, was needed in order to ensure recovery from the economic slump made worse by the Sept. 11 attacks against the World Trade Center and Pentagon.
Treasury Secretary Paul O'Neill said the business tax breaks in the bill will add ``momentum'' to the economy and help create jobs.
``As President Bush said, this bill not only takes care of unemployed workers, it also has tax relief for employers to create and retain jobs as a major part of it,'' O'Neill said in a statement. ``This legislation will add momentum so that we have a more robust economy recovery and return to full prosperity.''
The bill, which would cost the U.S. Treasury about $51 billion this year, would provide business tax breaks to encourage investment and help companies ease the pain of operating losses. It will also extend unemployment benefits 13 weeks beyond the current 26 weeks. States experiencing continued unemployment of 4 percent or higher would be eligible for additional extensions of benefits.
Bush has been pressing for an economic stimulus package since hijacked airliners slammed into the World Trade Center and Pentagon on Sept. 11. Six months after the attacks, many workers who lost their jobs are exhausting unemployment benefits, and Democrats want them extended.
CONTROL OF CONGRESS AT STAKE
Republicans, anxious to see a strong economy going into the November elections, had pressed for a broader tax package with more far-reaching tax breaks for businesses and individuals.
But they said the scaled-down legislation was the best they could achieve in light of Democratic resistance to more far-reaching business and individual tax cuts included in previous Republican-backed measures passed by the House.
The broader Republican-backed bills stalled in the Senate amid partisan bickering over tax cuts and measures to help unemployed workers pay for health insurance.
Democrats expressed disappointment lawmakers were unable to resolve differences over health care and the package does not include health benefits for unemployed workers.
In addition to extending unemployment benefits, the bill would allow businesses to write off 30 percent of the cost of computers and other equipment, a provision that should help high-tech firms that have been hit hard by the economic downturn.
The bill also allows businesses to use current losses to reduce tax payments for the previous five years. It also would extend a number of business tax breaks that otherwise would expire, including a tax credit for electricity production from wind, biomass and chicken waste. It also includes economic aid for New York.
The bill would cost about $51 billion this year and $43 billion next year. The cost would be $42 billion over 10 years. The long-term cost is less because as businesses write off more of their expenses and losses earlier, they have less to write off in later years. |
