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Senators poised to extend stimulus

The Baltimore Sun

WASHINGTON -- Just when House Democratic leaders and President Bush reached a rare political compromise on an economic stimulus plan, the Senate threatened yesterday to rain on their bipartisan parade.

Senators from both parties were drafting their own plans, which could increase spending and draw the ire of deficit-minded lawmakers. It could also complicate efforts to get checks in the mail to millions of Americans by late spring.

Sounding the alarm about Senate tinkering, White House spokeswoman Dana Perino said, "We believe this is a very good, bipartisan compromise, and it would be unfortunate if the Senate did anything to slow it down or blow it up."

Although both chambers are controlled by Democrats, senators are notoriously protective of their prerogatives. "The Senate is not going to willy-nilly rubber-stamp what the House does," Sen. Max Baucus , a Montana Democrat who is chairman of the Senate Finance Committee, said in a telephone interview.

Greg Valliere, chief political strategist for the Stanford Group Co. financial services firm, said he expects a plan to clear Congress, even if the Senate fiddles with it. "The Senate is notoriously independent and unwilling to be stampeded; this will be no exception," he said.

Still, he expects a package to become law within the next few weeks: "In the final analysis, most lawmakers are aghast to see their public approval ratings at all-time lows. This gives them an opportunity to show they can act quickly - even the Senate."

In a rare display of bipartisanship, House Democratic and Republican leaders and the president agreed Thursday to a roughly $150 billion plan that would provide tax rebates of as much as $1,200 per household - plus $300 per child - as well as business tax breaks to spur investment. Rebates would be phased out gradually for single filers earning more than $75,000 and couples earning more than $150,000 a year.

Bush had supported larger rebates of $800 to $1,600, but his plan would have left out 30 million working households of people who earn paychecks but don't make enough to pay income tax, according to calculations by the Urban Institute-Brookings Institution Tax Policy Center.

To address the mortgage crisis, the package raises the limit on Federal Housing Administration loans from $362,790 to as high as $729,750 in expensive areas, allowing more subprime mortgage holders to refinance into federally insured loans.

To widen the availability of mortgages across the country, it also provides a one-year boost to the cap on loans that Fannie Mae and Freddie Mac can buy, from $417,000 up to $729,750 in high-cost markets.

Both parties made concessions. Republicans backed away from seeking to make Bush's tax cuts permanent as part of the package and agreed to a Democratic demand to give rebates to workers who earn too little to pay income taxes. Democrats gave up calls to extend unemployment benefits and spend more on food stamps.

House Minority Leader John A. Boehner of Ohio, a key negotiator, expressed concern yesterday that the carefully balanced compromise could unravel if senators tinker with it too much. "It would be irresponsible for Senate Democrats to load this bill up with pork and other spending," he said.

Bush, speaking at a House GOP retreat in West Virginia, called the package "big enough" to help the economy and urged Congress to pass it as soon as possible "to get money in the hands of the people who are going to help this economy stay strong."

"I strongly believe it would be a mistake to delay or derail this bill," he said.

Senators from both parties say they are just as eager as the president and House leaders to reach a deal. But senators have their own ideas of what should be in the package, including increased spending on unemployment benefits, food stamps, energy assistance to low-income families and aid to states for infrastructure projects.

Democratic Sen. Dianne Feinstein of California said that one of her concerns about the compromise reached between the House and the White House was that "rebates don't get to the people until May or June."

"So the Senate should consider extending unemployment insurance and increasing food stamps to get help quickly to those who need it most," she said.

A number of senators called for doing more to help seniors, including those who live primarily on Social Security.

Sen. Barbara Boxer, also a California Democrat, in a letter to Senate leaders yesterday urged aid for seniors who do not pay taxes. They must have at least $3,000 in earned income to be eligible for a rebate. "California is home to 3.9 million people age 65 and older, many of whom live on fixed incomes and are particularly hard hit by rising prices," she said.

AARP spokesman Jim Dau said the organization believes that non-taxed seniors should be part of any stimulus package - even if that means spending more on food stamps or home heating assistance

Boxer listed other ideas for economic stimulus, including providing $10 billion to help communities combat the rising tide of vacant houses caused by foreclosures and providing tax breaks to promote "green jobs."

Richard Simon writes for the Los Angeles Times. The Associated Press contributed to this article.

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