Senate set to vote again on rebates

Lawmakers are debating what - if anything - to add to a $150 billion stimulus package approved by House. Key issues include aid to seniors and the unemployed.

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By Jeanne Sahadi, senior writer

NEW YORK ( -- A day after defeating a more expensive plan intended to spur the economy, the Senate on Thursday was expected to vote on a pared down stimulus package.

The Senate proposal defeated on Wednesday evening contained several additions to a $150 billion bipartisan bill approved by the House late last month.

The House bill, which President Bush pushed for in his State of the Union address last week, would give one-time tax rebates to about 117 million taxpayers. It would also provide temporary tax breaks for businesses and contains two measures aimed at helping homeowners get or refinance mortgages.

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.

Democrats in the Senate had pushed to add to the House bill more business tax breaks and extended unemployment benefits. Senators also wanted to offer rebates to higher-income households, seniors living on Social Security and disabled veterans and $1 billion in heating assistance to help lower-income people pay their heating bills.

The total cost of the Senate proposal was more than $200 billion.

The likely shape of final Senate legislation is unclear. Senate leaders were reportedly negotiating behind closed doors Thursday afternoon ahead of an expected vote.

The Associated Press reported that Senate Democrats had agreed to add only rebates for seniors and disabled veterans.

Here's a more detailed look at some of the provisions that have caused fissures between parties and chambers on the Hill.

Rebates for seniors and disabled vets. The Senate proposal expands the rebates offered in the House package to include 20 million seniors living on Social Security. Under the House plan, only tax filers with at least $3,000 of earned income would qualify.

The Senate proposal would also offer rebates to 250,000 disabled veterans who wouldn't qualify for them under the House plan.

Temporary extension of unemployment benefits. The Senate proposal offers at least an additional 13 weeks of unemployment benefits, a provision that was left out of the House bill and is opposed by many Republicans. However, the top Republican taxwriter, Finance Committee Member Charles Grassley, R-Iowa, said he would back extending benefits "to keep a bipartisan package together."

Many economists have come out in favor of the measure. Mark Zandi, chief economist of Moody's, estimates that the economy would see a return of $1.64 for every dollar spent on unemployment benefits.

Others aren't so sure. Harvard economist Martin Feldstein, who heads the National Bureau of Economic Research, said evidence suggests that extending unemployment benefits tends to discourage people from taking a job.

Rebates for higher income households. The House bill imposes income caps on taxpayers eligible to receive rebates - $75,000 for individuals and $150,000 for married couples. The Senate Finance Committee bill includes income caps but at a higher level than those in the House bill. Under the Senate proposal, tax rebates would be phased out for individuals making more than $150,000 and for couples making more than $300,000. To top of page

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