Amid intensely partisan debate, the Senate Finance Committee, on November 8, approved, 11-10, a tax stimulus package (as-yet-unnumbered) aimed at reviving the faltering economy.
Republicans called the plan a “political give-away,” while Democrats accused Republicans of supporting tax breaks that would go “to big businesses” and “to the wealthiest 1 percent” of Americans.
Sponsored by Committee Chair Max Baucus (D-MT), the bill would cost $67 billion in FY2002, and $45 billion over the next ten years. “Because a lot of the stimulus that’s provided in the first year is recouped in later years, the bill actually costs less over ten years than it does in the first year,” explained Sen. Baucus.
Similar to the House-passed stimulus package (H.R. 3090), the Senate legislation would provide tax rebates to those taxpayers who did not qualify for the rebate earlier in the year and would extend for one year the Work Opportunity Tax Credit and the Welfare-to-Work Tax Credit (see The Source, 10/26/01, p. 1).
The Senate plan, however, would temporarily extend and expand, for one year, unemployment benefits for displaced workers who have exhausted their regular 26 weeks of unemployment benefits since September 11. Those who qualify would receive an added 13 weeks of unemployment benefits.
The measure also would extend health benefits for displaced workers. Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), businesses with more than 20 employees are required to offer continued health insurance coverage to employees who have either lost their jobs or have lost their coverage as a result of the death of a spouse or parent. Employees, not the employer, are responsible for paying the full cost of this coverage, which can last up to 18 months. The Senate proposal would provide a 75 percent subsidy for up to one year on premiums for workers who lost their jobs after September 11 and qualify for COBRA.
For those who do not qualify for COBRA, the legislation would create a temporary state option to provide Medicaid coverage to workers laid off after September 11 and would provide temporary fiscal relief to states by increasing the federal Medicaid matching rate.
Additionally, the bill would extend unemployment benefits to part-time workers and would provide assistance for school construction, agricultural relief to rural areas, tax breaks for businesses, and tax breaks for investors and businesses in New York City.
Sen. Tom Daschle (D-SD) called the committee bill “the right plan at the right time.” He asked, “What could be more stimulative than to give money to unemployed workers in this country who have no way to participate in the economy without some help?”
On the other hand, Sen. Phil Gramm (R-TX) complained that “not one subsidy goes to one person who pays income tax, and we don’t subsidize investment.” He said, “Instead, we give subsidies for tobacco, and we give rebates to people who made no money.” He likened the Democratic plan to turning “chicken manure into energy,” and added, “we call that stimulus.”
Sen. Olympia Snowe (R-ME) admonished, “We certainly are not reaching legislative heights today,” adding that “this is not a profile in courage.” She urged her colleagues to “give compromise a chance, so that we can come together and Americans don’t need to be divided.”
The committee approved, by voice vote, an amendment by Sen. Robert Torricelli (D-NJ) that would extend tax breaks to the families of the victims of the attacks on September 11, including forgiveness of income tax for one year and estate tax relief. Sen. Torricelli also introduced an amendment on behalf of Sen. Don Nickles (R-OK) that would extend the same benefits to families of the victims of the Oklahoma City tragedy in 1995. That amendment was approved by voice vote.
The tax stimulus package will be considered by the Senate next week.
