House OKs $146B economic aid bill

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NEW YORK (CNNMoney.com) -- The House voted 385 to 35 Tuesday to approve an estimated $146 billion stimulus package aimed at countering the slowdown in economic growth.

The legislation, which House leaders brokered last week after intensive talks with the Bush administration, faces an uphill battle in the Senate.

A number of senators have said they want to amend the plan. Both chambers have sent out flares indicating there will be hard-headed negotiating ahead.

The battle is likely to be conducted at high speed since lawmakers say they want a stimulus package delivered for the president's signature by mid-February.

The House bill calls for one-time tax rebates to go primarily to individuals making less than $75,000 and to married couples making less than $150,000. It would also provide temporary tax breaks for businesses that would let them deduct more of their investments in plants and equipment more quickly. And it contains two measures aimed at helping homeowners get or refinance mortgages.

Taking the lead in the Senate is Finance Committee Chairman Max Baucus, D-Mont. He has proposed a $160 billion package that the committee will debate and possibly vote on Wednesday.

The Senate proposal differs from the House plan in several key ways. The sticking points: Who should get the rebates? Should they go to senior citizens and more six-figure households? Should the bill help unemployed workers? Should efforts to ease the housing crunch be included, and how many tax breaks should businesses get?

Rebates would be smaller but go to more people. The Senate proposal would offer rebates to seniors whose primary income comes from Social Security. Under the House bill, rebates would go only to households with earned income.

The Senate proposal also eliminates income caps on who would qualify for a rebate, which means all tax filers, not just low- and middle-income households targeted by the House plan, would receive one.

Under the Senate plan, most tax filers would receive slightly less than they would under the House plan. For example, a married couple filing jointly that makes enough to be in at least the 15 percent tax bracket would get $1,000 under the Senate proposal versus $1,200 under the House bill.

Unemployment insurance. The Senate proposal would offer at least 13-week extensions on unemployment benefits. The House bill has no such extension.

Housing provisions. The House bill calls for the caps on the size of loans that may be purchased by Fannie Mae (FNM) and Freddie Mac (FRE, Fortune 500) to be raised from the current level of $417,000 to nearly $730,000 in the highest cost housing markets. It also calls for an increase in the size of loans that would be eligible to be insured by the Federal Housing Administration. The Senate proposal as mapped out by Baucus contains no such provisions.

Business tax breaks. The Senate proposal has the same breaks as the House bill but adds one more: the so-called net operating loss carryback (NOL). The NOL provision would extend to five years from two the number of years a company may apply its losses to past tax bills.