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Senate stimulus plan falls one vote short
Despite backing of 59 senators, $158 billion plan fails
By Rex Nutting, MarketWatch
Last update: 6:37 p.m. EST Feb. 6, 2008
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WASHINGTON (MarketWatch) -- A $158 billion plan to stimulate economic growth failed in the Senate late Wednesday on a 58-41 procedural vote, despite support from a majority of senators.
The bill needed 60 votes to be considered under Senate rules. At the last minute, Senate Democratic leader Harry Reid switched his vote to no, giving him to right to ask for another vote.
The vote was largely on party lines, with all 49 Democrats and two independents joining with eight of 49 Republicans in voting for it.
Barring some kind of deal to win one more vote, the Senate will now turn to the House-approved version of the economic stimulus plan, which includes $600 to $1,200 tax rebate checks for 117 million households as well as tax breaks for business investments at a cost of $146 billion.
President Bush had urged the Senate to pass the House plan so he could quickly sign the legislation. Lawmakers are trying to meet a self-imposed deadline of Feb. 15 to send the bill to Bush.
The House plan was negotiated between the White House and Democratic and Republican leaders in the House without any input from the Senate.
"If we do it quickly, the people will be astonished," said Republican leader Mitch McConnell, R-Ky., who led his party to once again frustrate the efforts of the Democratic majority.
The Internal Revenue Service has indicated it won't be able to send out rebate checks until after the April 15 tax deadline. Sending out all the checks could take about three months.
"This is a bipartisan package," said Reid, adding that the Senate took the House plan and made it better. "It's smart, targeted and effective."
The defeated Senate plan, sponsored by Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, would have sent slightly smaller checks of $500 to $1,000 to about 22 million more people than the House plan, including retirees and disabled people. More upper-income Americans would have received checks under the Senate plan.
The defeated Senate plan also included an extension of unemployment benefits beyond six months, and it included an extension of several tax credits for using renewable energy. The Senate plan would have also allowed municipalities to issue tax-exempt bonds to help refinance subprime mortgages.
The extension of unemployment benefits was judged by the nonpartisan Congressional Budget Office to be among the most effective ways to stimulate the economy. Business tax breaks, by contrast, were given low marks as stimulus.
Both plans would give money to workers who don't make enough to have income tax liability, but who do pay payroll taxes. End of Story