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Recovery Rebates and Economic Stimulus for the American People Act of 2008

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Summary
In January 2008, Congress and President Bush responded to a deepening economic malaise brought on by the mortgage lending crisis with calls for a quick economic stimulus package. President George Bush outlined his plans for an economic stimulus package, including tax rebates for many Americans and business investment incentives. The House of Representatives announced legislation modeled on the White House proposal, while the Senate developed its own version, which included extended unemployment benefits.


Current Status

The House and Senate have developed competing versions of an economic stimulus package. The House approved its version on January 29. On February 6, Senate Republicans blocked an attempt to end debate on the Senate version. On February 7, the Senate and House approved an amended House version, extending tab rebates to 20 million seniors and 250,000 disabled veterans and their widows.

House Version

On January 28, 2008, the House introduced the Recovery Rebates and Economic Stimulus for the American People Act of 2008.

Bill Summary

<USbillinfo congress="110" bill="H.R.5140" />

On January 18, following several weeks of negative economic indicators, and on the heels of a 300-point slide of the Dow Jones Industrial Average, President George Bush outlined his plans for an economic stimulus package. The administration proposal would include tax rebates and other incentives, and could cost between $140 billion and $150 billion.[1]

The same week, House Speaker Nancy Pelosi (D-Calif.) promised to have a stimulus package ready for action by Jan. 28, the day of the State of the Union address, while congressional Republicans had reportedly dropped their insistence that the package include making President Bush's tax cuts permanent.[2]

On Jan. 17, 2008, Federal Reserve Chairman Ben Bernanke urged Congress to move quickly with a stimulus package focused on short-term injections in testimony before the House Budget Committee. Bernanke specifically urged Congress not to include long-term policy changes (such as permanent tax cuts or major infrastructure projects) in a stimulus package. He called proposed package price tags of $50-$150 billion "reasonable" and said that actions aimed at putting money in the hands of low and middle-income Americans would best boost the economy. Bernanke repeatedly declined to take a position on long-term tax and spending levels.[2]

Tentative deal reached

House leaders and the White House reached a tentative agreement on January 24, 2008 on a $145 billion economic stimulus package. The measure would quickly send payments to the poor and middle class while offering one-time incentives to businesses to invest in new equipment and write off tax losses.[3]

Provisions of the deal included:

  • Almost everyone earning a paycheck would receive at least $300 in rebates from the Internal Revenue Service.
  • Most workers would receive rebates of $600, or $1200 per couple. Families with children would receive an additionally $300 per child.
  • Workers who earned at least $3,000 in 2007, but not enough to pay income taxes, would be eligible for $300.
  • Rebates would be limited to single taxpayers who earned up to $75,000 or couples with incomes up to $150,000.

Additionally, administration officials agreed to expand the Federal Housing Administration's ability to insure higher-priced mortgages and to help homeowners threatened with foreclosure renegotiate their loans without sharp payments increases.[3]

The deal was reached after a late-night negotiation between Pelosi, House Minority Leader John Boehner, and Treasury Secretary Henry Paulson. Republicans agreed to offer rebates up to $1,000, even to working families earning too little to pay income tax. Boehner wrote provisions that would allow faster tax write-offs for corporate investment and immediate tax deductions for small-business investments in plants and equipment. Businesses would also be able to tax deductions in 2008 on operating losses from as long as five years earlier.[3]

Pelosi gave up some demands to keep the package tilted towards the middle class and to include the working poor. The dropped provisions included extending unemployment benefits and food stamps, setting aside proposed funding increases for low-income heating assistance, and aid to state and local governments in the form of either Medicaid assistance or infrastructure funding. Senior Democratic aides said they needed more committee chairmen and rank-and-file members to sign off on the plan before it could be unveiled. House Democrats assured members the package would still go through the Senate where Democrats could add additional provisions.[3]

Passage

<USvoteinfo year="2008" chamber="house" rollcall="25" />

On January 29, 2008, the House of Representatives overwhelmingly approved its version of the stimulus package. Following the vote, Pelosi and Boehner called on the Senate to adopt the House version unchanged and without delay. [4]

Senate Version

Bill Summary

Senate Finance Committee Chairman Max Baucus (D-Mont.) announced his committee would introduce a separate stimulus package, to include additional measures above and beyond those offered by the House and President Bush.[5]

Provisions of the Senate version include:

  • Most workers would receive rebates of $500, or $1,000 per couple. Families with children would receive an additionally $300 per child.
  • Seniors would also be eligible for the rebates, if they receive $3,000 in Social Security income.

Sen. Charles Shumer (D-N.Y.), said he would work to add "$500 million of emergency foreclosure-prevention" to the package when it is introduced.[5]

Senate Republicans, unlike their House counterparts, appeared unwilling to forgo an attempt to make the Bush tax cuts permanent. Sen. Jim Demint (R-S.C.), said he would try to include the tax cuts in the Senate's version of the stimulus package.[5]

Cloture vote fails

<USvoteinfo year="2008" chamber="senate" rollcall="8" />

On February 6, the Senate failed to invoke cloture on its version of the bill, falling short of the 60-vote requirement by one vote. Every Democrat voted for the measure, as did eight Republicans. Sen. John McCain (R-Ariz.), though in Washington, did not cast a vote. Following the failed vote, Sen. Majority Leader Harry Reid (D-Nev.), switched his vote so he could bring the measure to the floor for further debate at another time.[6]

The following day, Senate leaders announced a deal was near completion on a slimmer version of the Senate bill. Green energy tax breaks would be trimmed, as would funding for low income heating assistance and an extension for unemployment insurance. The legislation would still amend the House bill to provide rebate checks to seniors and veterans. [7]

Bill passage

<USvoteinfo year="2008" chamber="senate" rollcall="10" /> On February 7, a package similar to the House version was approved by senators. It did include seniors and disabled veterans to the mix of Americans who will receive tax rebate checks. According to Reid, more than 20 million seniors were made eligible for the rebates, as were 250,000 veterans and their widows. [8]

The final price tag for the stimulus package was $152 billion. Americans would receive at least $300 in rebates if they could demonstrate $3,000 in earned income for 2007. Benefits paid to seniors and veterans could count toward that threshold. Individual tax payers earing less than $75,000 would see $600 rebate checks, while couple earning less than $150,000 would get checks for $1,200.[9]

The House approved the Senate-backed plan by a 380-34 vote, sending the stimulus bill to President Bush's desk for signature. <USvoteinfo year="2008" chamber="house" rollcall="42" />

Bush signs bill

On February 13, 2008, President George W. Bush signed the $152 billion stimulus package into law. “You know, a lot of folks in America probably were saying that it’s impossible for those of us in Washington to find common ground, to reach compromise on important issues,” Bush said. “I didn’t feel that way; I know the leaders didn’t feel that way. And as a result, we have come together on a single mission — and that is to put the people’s interests first.”[10]

Articles and resources

Related SourceWatch articles

Sources

  1. William Branigin, "Bush Calls for Economic Stimulus Package", The Washington Post, January 18, 2008
  2. 2.0 2.1 Neil Irwin and Jonathan Weisman, "Fed Chairman Backs Stimulus", The Washington Post, January 18, 2008
  3. 3.0 3.1 3.2 3.3 Jonathan Weisman, "Tentative Deal Reached on Economic Stimulus Package," The Washington Post, January 24, 2008.
  4. David Herszenhorn, "House Approves Economic Stimulus Plan", The New York Times, January 30, 2008
  5. 5.0 5.1 5.2 Jonathan Weisman, "Senate to Offer Own Stimulus Package," The Washington Post, January 29, 2008.
  6. Jonathan Weisman, "Senate's Stimulus Measure Blocked", The Washington Post, February 7, 2008
  7. J. Taylor Rushing, "Senators near deal on stimulus", The Hill, February 7, 2008
  8. J. Taylor Rushing and Manu Raju, "Senate passage sets stimulus on path to White House", The Hill, February 7, 2008
  9. Jonathan Weisman, "Congress Approves Stimulus Package", The Washington Post, February 8, 2008
  10. Klaus Marre, "Bush signs stimulus bill," The Hill, February 13, 2008.

External resources

External articles