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Tax rebates: Senate delays economic stimulus plan vote

WASHINGTON -- Politics and some tough lobbying by senior citizens combined to derail a planned vote Thursday in the Senate on a stimulus plan to rescue the economy from recession, delaying passage of the legislation until next week.

WASHINGTON -- Politics and some tough lobbying by senior citizens combined to derail a planned vote Thursday in the Senate on a stimulus plan to rescue the economy from recession, delaying passage of the legislation until next week.

Even as Senate leaders announced their delay in voting, phone lines to many Senate offices were jammed, and a large volume of e-mail slowed congressional Web sites.

"A chord has been struck," said David Certner, federal affairs director for the AARP. The 39 million-member lobby for American seniors added its weight to a growing number of complaints from seniors and disabled veterans.

The AARP says the $150 billion stimulus bill passed by the House of Representatives earlier this week and supported by President Bush leaves out 20 million older Americans who depend largely on their Social Security checks to get by.

"These older Americans spend 92 percent of their income -- a greater proportionate share of income than all other adults. This spending pattern strongly suggests that rebates for these individuals will be spent entirely and quickly, helping to provide an immediate boost to the economy," Bill Novelli, the AARP's chief executive officer, wrote in a letter Thursday to all senators.

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The House bill provides tax rebates of up to $600 for any person with earned income above $3,000. The Senate Finance Committee, with support from the AARP, modified that late Wednesday in its own $157 billion stimulus package. The Senate package reduces the individual rebate to $500 in order to include additional rebates to any senior or disabled person who's receiving more than $3,000 a year in benefits from the Social Security Administration.

Seniors and the disabled who don't pay income taxes would have to apply to receive tax rebates, creating the need for an outreach and education effort. The House bill, on the other hand, provides automatic rebates for people who pay payroll and/or income taxes.

"Complexity is our enemy, and I am concerned that the bill that has come out of the Senate Finance Committee is already too complex," Treasury Secretary Henry Paulson said Thursday.

Democrats overwhelmingly support the Senate Finance Committee measure, but only three Republicans on the committee did. Senate Minority Leader Mitch McConnell, R-Ky., has threatened procedural moves to prevent a Senate floor vote, and there were no indications Thursday of other Republican senators crossing party lines. Democrats need to lure away another six or seven Republicans, and they're counting on seniors to pressure their Republican counterparts.

Adding to the complications, New York Sen. Hillary Clinton and Illinois Sen. Barack Obama, both Democrats, are outside Washington running for president. Several senators who back one or the other of them also were heading out for several days of campaigning before next week's Super Tuesday voting, when 22 states hold Democratic primaries.

Republican Sen. John McCain of Arizona also is out on the campaign trail. His office said it was unclear whether he'd return next week to vote on the stimulus package.

If the Democrats can't overcome the procedural obstacles, they plan to take up the House measure and tack on amendments to expand food-stamp programs, provide home-heating assistance and extend rebates to seniors and the disabled.

The Senate Finance Committee bill also would extend unemployment insurance benefits by 13 weeks. It includes a trigger that would allow another 13 weeks of benefits if a state's unemployment rate averages 6.5 percent or higher in a three-month period.

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The nonpartisan Congressional Budget Office thinks that extending unemployment insurance is the quickest way to stimulate the economy, because within weeks it would reach people who'd spend the money. Tax rebates can't go out till mid-May at the earliest.

"I think the situation is perfectly appropriate to provide unemployment insurance [extensions] now," said Jason Furman, an economist with the liberal Brookings Institution, a research center in Washington.

When lawmakers extended unemployment benefits in 2001, they did so near the end of a recession, so the positive effects were muted.

"I'd rather be ahead of the curve," Furman said.

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