Senate OKs rebates to juice economy

NEW YORK (CNNMoney.com) -- The Senate, ending a contentious and partisan debate, voted 81 to 16 on Thursday to approve a roughly $170 billion version of a House plan to spur the economy.

The Senate bill would pay one-time rebates to 117 million low- and middle-income households, 20 million senior citizens living off of Social Security and 250,000 disabled veterans.

Senate Majority Leader Harry Reid, D-Nev., had hoped for a more expansive package. He said Thursday afternoon that the Senate had an obligation to improve on the House bill and "we've done that."

President Bush said in a statement that he supported the Senate-passed measure.

"This plan is robust, broad-based, timely, and it will be effective," Bush said. "This bill will help to stimulate consumer spending and accelerate needed business investment."

The agreement comes a day after the Senate defeated a more expensive stimulus plan than the House package. Senate Democrats were hoping to add in at least a 13-week extension of unemployment benefits, heating aid subsidies and a higher income cap on the households eligible to receive rebates.

The House is expected to consider and pass the amended package this evening. It could go to Bush for his signature as early as Friday, a week ahead of the Feb. 15 deadline that lawmakers had set for themselves.

The goal is to stimulate the flagging economy by putting cash in the hands of consumers while giving businesses financial incentives to invest in plants and equipment and create jobs.

In addition to the rebates, the bill approved by the Senate Thursday would provide temporary tax breaks for businesses and contains two measures aimed at helping homeowners get or refinance mortgages.

Here's a breakdown of the main provisions:

Tax rebates to 137 million people. Rebates of up to $600 for individuals and $1,200 to couples would go to single filers making less than $75,000 and joint filers making less than $150,000. In addition, parents would receive $300 rebates per child.

Those who do not owe income taxes but have at least $3,000 in income would get a $300 rebate.

The IRS will start sending out checks in early May, said Treasury Secretary Henry Paulson.

"Payments will be largely completed this summer, putting cash in the hands of millions of Americans at a time when our economy is experiencing slower growth," Paulson said.

Housing provisions. The 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 temporarily 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.

Business tax breaks. The bill would provide more generous expensing provisions for small businesses and let large businesses deduct more of their purchases more quickly.