Democrats lose Senate vote to add $25 billion to stimulus

McClatchy NewspapersFebruary 3, 2009 

WASHINGTON — The Senate refused on Tuesday to pump an additional $25 billion into road, transit and water projects in its economic stimulus package, but it approved a tax break for car buyers, as lawmakers struggled for ways to craft a bipartisan plan.

Members also soundly rejected a tax proposal to encourage companies to bring their foreign earnings back to the U.S. as they looked for ways either to pare the nearly $900 billion bill or at least get the money out more quickly.

The nonpartisan Congressional Budget Office estimated that about 78 percent of the Senate plan would flow into the economy by October 2010, up from 64 percent for the $819 billion package that the House of Representatives passed last week. Many senators thought that was still too slow, however.

The Senate did accept one change: Most consumers who buy new cars, minivans or light trucks by the end of the year would get tax deductions for the sales or excise taxes and the interest on their loans. Sponsor Barbara Mikulski, D-Md., estimated that a family would save about $1,500 on a $25,000 vehicle. The key vote on the $11 billion measure was 71-26.

More common on Tuesday were fights along partisan lines as senators slowly worked through the bill. Votes are expected to continue throughout the week, with final passage possible Friday.

Tuesday's votes and closed-door negotiations suggested that little is predictable. Adding money for infrastructure, for instance, seemed to have strong backing from members of both parties.

"Our highways are jammed. People go to work in gridlock," said Sen. Dianne Feinstein, D-Calif., who helped lead the effort to add the money. "The beauty of doing it as part of this package is that it puts people to work immediately on projects that are shovel-ready."

Their proposal would've added $18 billion for highway and rail projects and $7 billion for clean-water and sewer projects. The bill already included $41 billion for such projects.

The measure was scuttled when 38 Republicans and Sen. Mary Landrieu, D-La., who wanted more money for Corps of Engineers projects, objected to increasing the overall size of the stimulus package. Under Senate rules that require 60 votes to push the amendment forward, it fell two votes short, failing 58-39.

Sens. Ben Nelson, D-Neb., and Susan Collins, R-Maine, were working on alternatives together, while members of both parties rejected on a procedural vote a corporate break for what's called "repatriation." The vote lost by 55 to 42.

It would've applied a temporarily reduced tax rate of 5.25 percent on foreign earnings brought back to the U.S. The top U.S. corporate tax rate of 35 percent often encourages companies to stockpile their earnings in countries with lower tax rates.

Proponents regard the "tax holiday" as a way to prod firms to spend more and create jobs onshore. It would cost the government about $40 billion. However, Sen. Carl Levin, D-Mich., is leading an investigation into a previous tax holiday for foreign earnings to see whether the money created jobs or led instead to corporate stock buybacks, as one study suggests.

The debate pitted Democrats against each other. "In the pantheon of bad ideas, this one is way up there," said Sen. Byron Dorgan, D-N.D.

Not so, said Sen. Barbara Boxer, D-Calif. "We're going to create jobs if we win" the vote, she said.

On another front, Republicans promoted their housing plan, which would have the government guarantee mortgage rates of 4 percent for a year or two for creditworthy borrowers. New and current homeowners could get loans of as much as $625,000.

Republicans also united behind an alternative $445 billion package that would cut the lowest income tax rates while spending $70 billion on infrastructure improvements but eliminating most of the money for education and health care in the Democrats' version.

"Education is viewed by many as a state issue, not a federal funding issue," said Sen. Mel Martinez, R-Fla.

Republicans were encouraged by one development: Democrats allowed them to offer amendments freely, instead of setting up the kinds of procedural roadblocks that prevented Republicans from bringing up initiatives in previous years.

Both parties appeared to be taking a cue from President Barack Obama, who reiterated his desire for a bipartisan package.

"Now is the time for Washington to act with the same sense of urgency that Americans all across the country feel every single day," he said at the White House. "With the stakes this high, we cannot afford to get trapped in the same old partisan gridlock."

ON THE WEB

Congressional Budget Office analysis of Senate stimulus plan

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McClatchy Newspapers 2009

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