Senate may add retiree rebates
Jobless benefits are also eyed, but Bush warns not to fiddle.
Published January 26, 2008
WASHINGTON - Retirees living off Social Security are frustrated that they won't get tax rebate checks through a bipartisan economic stimulus plan before the House, and Senate Democrats began efforts Friday to include them.
Senators from both parties said they will push for significant additions, including an extension of jobless benefits, to the $150-billion package of rebates and business tax cuts in a deal wrapped up Thursday between House leaders and President Bush.
Bush urged Congress Friday to pass the plan as is, saying that only quick action will kick-start the economy. "I strongly believe it would be a mistake to delay or derail this bill."
But senators are refusing to rubber stamp the House measure. That raises the possibility of protracted negotiations if senators succeed in giving retirees tax rebates, extending unemployment benefits, boosting heating subsidies for the poor and temporarily increasing food stamp payments.
All of those items floated by top Senate Democrats were tossed overboard during intense talks between the administration, House Speaker Nancy Pelosi and Minority Leader John Boehner.
Their plan would give individual taxpayers up to $600 in rebates, working couples $1,200 and those with children an additional $300 per child. The rebates would phase out gradually for individuals whose adjusted gross income exceeds $75,000 and for couples with incomes above $150,000.
The plan would leave out about 20-million senior citizens living chiefly on Social Security. They wouldn't get rebate checks unless they have at least $3,000 in earned income or pay income taxes based on other sources such as earnings, interest, investments or private pension plans.
"Less than half of all Americans 65 and older would get it," said AARP spokesman Jim Dau.
The House plans to pass a bill as early as Tuesday, leaving the Senate two weeks to pass its bill, reach agreement with the House and Bush, and meet Majority Leader Harry Reid's promise to wrap up by Feb. 15.
The success of the emergency plan will hinge on what American consumers do with the money. Bush and congressional leaders hope people will spend the rebates - a flat-screen TV, maybe, or a trip to Disneyland - to help revive an economy sagging from bad mortgage lending and a lack of confidence in the stock market.
But the spending habits of Americans, many of whom used the rising value of their homes during the real-estate boom like a piggy bank, may be changing as housing prices tumble and credit dries up.
"I expect that there'll be some spending out of this rebate. But it's true that households are going to be facing a tougher financial position at any time since the early 1980s," said Steve Fazzari, a professor of economics at Washington University in St. Louis.
The National Foundation for Credit Counseling urged consumers Friday to use the money to pay down debt and past-due bills, or to pay for home repairs or remodeling that might cut energy bills.
Save or spend?
Rather than shop, some experts think Americans should consider using the rebates to:
-Pay down debt, especially credit card balances.
-Start an emergency savings fund.
-Set money aside for planned expenses, like vacation.
-Open retirement account.
-Make needed repairs to house or car; make house more energy-efficient.
-Make an extra principal payment on mortgage or other loan.
-Put the rebate toward a down payment on a home.
Association of Independent Consumer Credit Counseling Agencies, National Foundation for Credit Counseling