Congress and the White House forged a deal Thursday to begin rushing tax rebates of $600 to $1,200 to most tax filers by summer, hoping they will spend the money just as quickly and jolt the ailing economy to life. How that is supposed to help the economy between now and then is unclear, except that it is obviously meant to keep the stock market from collapsing completely and putting all those rich people – made richer by seven years of Bush – from losing their ill-gotten gains.

The one-time tax rebates are at the center of a an agreement to pump about $150 billion into the economy this year and perhaps stave off the first recession since 2001, according to the glowing Associated Press account. Here are the toned down most important points.

About two-thirds of the tax relief would go out in rebate checks to 117 million families beginning in May. Businesses would get $50 billion in incentives to invest in new plants and equipment.

Individual taxpayers would get up to $600 in rebates, working couples $1,200 and those with children an additional $300 per child under the agreement. In a key concession to Democrats, 35 million families who make at least $3,000 but don’t pay taxes would get $300 rebates.

The rebates would phase out gradually for individuals whose adjusted gross income exceeds $75,000 and for couples with incomes above $150,000. Contributions to IRA and 401(k) retirement accounts and health savings accounts would not count toward the income limit.

The bill will go straight to the House floor next week and on to the Senate, where some Democrats hope to add elements such as extending unemployment benefits for workers whose benefits have run out.

Indeed, many Democrats, such as Ways and Means Committee Chairman Charles Rangel, D-N.Y., and Edward Kennedy of Massachusetts, the liberal lion of the Senate, were deeply unhappy that Pelosi agreed to jettison that proposal in late-stage talks, as well as plans to increase food stamp payments.

“I do not understand, and cannot accept, the resistance of President Bush and Republican leaders to including an extension of unemployment benefits for those who are without work through no fault of their own,” Rangel said.

If the Senate gives quick approval, the first rebate payments could begin going out in May and most people could have them by July, he said.

It has become increasingly clear that the economy is teetering on the edge of recession, if it hasn’t already gone over that line. The crisis in subprime home loans has hit hard at many lending institutions, cramping credit for almost everyone else. Economic growth has all but disappeared, companies are reporting big losses and Wall Street had been tumbling day after day – even after emergency Federal Reserve rate-cutting – until Wednesday’s hopeful talk about the stimulus deal. The Dow Jones industrial average was up more than 100 points Thursday after soaring nearly 300 the day before.

In addition to concerns openly expressed by lawmakers, members of Congress are not eager to run for re-election this fall with voters fearful of losing jobs in a recession.

For businesses, the stimulus measure would allow them to immediate tax write-offs for 50 percent of the purchase price of plants and other capital equipment and permit small businesses to write off additional purchases of equipment. A provision to allow businesses suffering losses now to reclaim taxes previously paid was dropped in end-stage talks.

Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits in exchange for gaining the rebates of at least $300 for almost everyone earning a paycheck, including those who make too little to pay income taxes.

“I can’t say that I’m totally pleased with the package, but I do know that it will help stimulate the economy. But if it does not, then there will be more to come,” Pelosi said. She said that House Democrats may act on other proposals to stimulate the economy, particularly if it worsens in coming weeks.

The agreement left some lawmakers in both parties with a bitter taste, and they complained that their leaders had sacrificed too much in the interest of striking a deal. Many senior Democrats were particularly upset that the package omitted the unemployment extension.

Tax Rebate Deal Could Mean Checks by May, Or June?

This plan seems doomed to fail. Catastrophe is at the domestic door front, and the Republicans must now take responsibility. If they have to, the Democrats should go to the mat with Bush, even if that means the bailout fails. Let if fall and see how politics changes in this country.

This entry was posted on Thursday, January 24th, 2008 at 11:57 pm and is filed under The Economy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.