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Thursday, January 15, 2009

House Dems offer $825B Stimulus Bill

NEW YORK ( -- After weeks of talks with President-elect Barack Obama's top aides, House Democrats on Thursday released a summary of an $825 billion economic recovery package that calls for $275 billion in tax cuts and $550 billion in spending and aid to states.

House Speaker Nancy Pelosi, D-Calif., again expressed confidence that Congress would reach the mid-February deadline for getting a bill to Obama's desk.

But, she noted, "this [package] is just the first step."

The bill will now be sent to the relevant House committees for review and possible changes and later will be sent to conference with the Senate to resolve any differences the chambers may have.

Obama is scheduled to promote the bill on Friday in Ohio, where he'll speak with workers at a wind turbine factory. The package calls for $54 billion to double production of alternative energy.

The House proposal -- the American Recovery and Reinvestment bill -- is likely the most expensive spending plan Congress has ever proposed. Obama, who takes office on Tuesday, has called it central to stemming what has become the worst economic crisis in decades.

A full copy of the legislation is expected to be posted on the House Web site later Thursday.

Obama's top economic advisers have estimated that the stimulus plan they laid out, which is largely reflected in the House Democrats' bill, could create between 3 million and 4 million jobs by 2010 across a broad array of industries.

But members of Obama's team and other economists acknowledge that if close to 4 million jobs are created that won't be a panacea for the economy. Rather, it would lead to a lesser rate of unemployment than would otherwise be the case if there was no economic recovery package.

The bill calls for a number of measures to help the economically vulnerable. Among them: $27 billion to continue the current extended unemployment benefits program through Dec. 31, 2009; and another $9 billion to increase the average unemployment check by $25 a week on top of the roughly $300 a week jobless workers currently receive.

There is also a provision calling for $30.3 billion to subsidize for 12 months the cost of Cobra health insurance coverage and extend the time eligible workers may keep it. Cobra coverage allows newly laid off workers to keep health insurance provided by their former employers. Workers who would be eligible are those 55 and older and those who have at least 10 years' tenure with their employer.

The bill put together by House Democrats doesn't include everything Obama wanted.

After complaints from Democrats in both chambers, negotiators dropped a $3,000-per-hire tax credit that Obama proposed to provide incentives for employers to create jobs in the United States. Critics said the measure wouldn't achieve its aim since it wasn't large enough to help employers who can't afford a worker's total compensation in the first place.

But another tax cut -- one aimed at broadening businesses' ability to write off their losses, called "net operating loss carryback" -- is still in the package, although it's unclear if it will remain in the final bill.

Although no specifics were offered in the House's summary of provisions, the package also includes a "Making Work Pay Credit," which is something that Obama campaigned on.

The credit as Obama described it would provide low- and middle-income workers with a tax cut equal to $500 a year for individuals and $1,000 for couples. The money could be delivered fairly quickly to workers, with companies reducing the tax they withhold from employees' paychecks. The credit would also be refundable, meaning eligible workers can get it even if they don't make enough money to owe income tax.

The bill also includes an expansion of the Earned Income Tax Credit, which is a refundable credit for low-income workers, and an increase in the child tax credit.