Senate Reaches $780 Billion Compromise Package [Tax cuts eliminated]

WSJ ^ | February 7, 2009 | GREG HITT and JONATHAN WEISMAN

[Brilliant]

Senate Democratic leaders struck a deal late Friday with three moderate Republicans on a leaner economic-recovery package...

Senators valued the compromise plan at $780 billion -- well less than the $930 billion plan the Senate debated most of the day...

Not counted in that estimate are several popular tax breaks -- including measures to encourage auto and home sales -- that were approved this week on the Senate floor and are expected to be incorporated into the legislation. Those could push the final cost of the Senate plan closer to $820 billion...

White House aides refused to call those cuts a defeat for the president. Indeed, Sen. Susan Collins (R., Maine) said White House chief of staff Rahm Emanuel helped negotiate the final deal...

The plan includes some $25 billion in trims from the $275 billion tax-relief elements in the earlier Senate package. Senate Finance Chairman Max Baucus (D., Mont.) said the decision to scale back the tax cuts reflected an effort to "get this more balanced." Through the day, liberal members of the Democratic caucus pushed back against proposed cuts, insisting that all of the reductions in the package not come from spending, aides and senators said.

The reductions in tax relief would come from sharply scaling back a proposal to allow money-losing firms to get refunds for taxes paid in past years. It would also trim eligibility for the payroll tax holiday, phasing out the benefit for couples making more than $140,000 a year, down from $150,000, and for singles making $70,000, down from $75,000, congressional aides said. Also, the agreement raises the earnings threshold to $8,100 for low-income taxpayers to qualify for the refundable child tax credit...

[Conservativegreatgrandma]

Pass the Thune Amendment giving each taxpayer in the US a check for $5000, which would mean $10,000 per household. Which would you rather have--this pork bill or a check for $10,000?

If we get a check for $10,000 at least some of it would be put to good use.

[carton253]

At 10:30 a.m. when I called Voinovich, his office stated he would not vote for the bill. At 4:00, he had been bought... and his phone line was busy, so I couldn’t angrily tell him what I thought of his weasily ways.
We get the government we deserve.

[skeeter]

Sounds like dropping the tax cuts from the bill finally won over Snowe, Collins & Spectre.

[screaminsunshine]

Republican Party needs to cut off all funding for these dirty rats.

[Kenny]

Hopefully, we will be able to say ONLY 2 or 3 Republicans voted for this. If others hold out, we could blame Dems easily with the “ONLY 2 or 3” were bought message.

I’m terrified though of the final count on these pompous egotistical senators.

Still love the House though for what they tried to do.

[janetjanet998]

what is the payroll tax holiday?

[HwyChile]

The GOP is going to have to start attacking Obama as a leftist who deceived the voters and who is breaking all his campaign promises. Their strategy has been to say the democrat congress is not doing what Obama wants, but that is a big mistake because it leave Obama with power. The GOP must go all out on Obama (kill the queen of the hive) or they are going to lose. They have a good reason to now that Obama has gone on the offensive and shown he is not bipartisan, etc.

[philly-d-kidder]

it was 827 billion minus interest of course!!

[weston]

The Thune amendment is the ONLY thing to make sense in this whole debacle.
So I, as a single, PAID the federal government over 12,000 dollars last year. But I am not entitled to one thin dime in rebate or tax cuts. On the other hand, someone who sat on their butt all year collecting welfare, paid zero to the government, gets a check.
That, folks, is redistribution of wealth. Pretty soon we'll all be like Russians sipping our Vodka and not giving a damn about working hard, because there is NO benefit to producing. Graft will be king.

[hosepipe]

780 billion is 780,000 MILLION..

[palmer]

Another try to pump up consumption. The economy needs investment (i.e. tax breaks for business) not consumption (deficit spending so idiots can buy crap from China)

[Kenny]

I remember Gov. Florio (lost 1981 election) passed taxes the people didn’t want. I recall seeing them picket on bridges and elsewhere with signs that said “We’ll remember in November”.

And they did.

[engrpat]

Any odds on when hyper-inflation will kick in? I give it two years or less and we will see inflation out of the starting blocks. What we will see will make Carter cry with envy.

[4rcane]

Some Republicans here seem to be missing the big picture. TAX CUT without SPENDING CUTS its JUST ANOTHER TAX INCREASE THRU INFLATION

[Thank You Rush]

“”Hopefully, we will be able to say ONLY 2 or 3 Republicans voted for this””

I just don’t believe they have an agreement or they would have voted yesterday. They were there until late last night - why not vote? Vote on Sunday - WHY? I think they are all lying.......

[Piquaboy]

780 Billion. That is just a drop in a bucket. Are those people who voted for that bunch of crap human? They all should be thrown out of office.

[Oldexpat]

These three traitors should be thrown out of the GOP caucus.
There needs to be a united front against the terrible legislation.
Now, when the commercial realestate tanks and the next wave of foreclosurers hit..we are going to be out of credit.

[jwparkerjr]

That's a plan where they stimulate the economy by letting everyone get a paycheck for the full amount of what they earned in a pay period. There would be no withholding for income tax, social security, medicare, all the federal withholding. My wife pays about $300 a payday in withholding, or about $600 a month. In a year that's over $7,000 that we never see and certainly can't spend.

There are several distinct advantages to a tax holiday as the mechanism to stimulate the economy. First, it's very quick. You see it in your next paycheck after the bill is passed and signed. No waiting months and months for Treasury to get a check to you. Second, it's YOUR money. You get to keep more of what you earn, and YOU spend it in the way you think will best benefit you and your family. Third, it goes ONLY to those who are working and producing. If you aren't working then you aren't paying taxes and you have no one to blame but yourself. Fourth, It's what the Founding Fathers had in mind when they started this great nation.

Now for the bad news! There are two main reasons it would be a cold day in hell before Congress uses this to stimulate the economy. One, they have no control over how you spend the money. It short circuits their ability to social engineer at your expense. Second, they really don't want you realizing just how much it costs you to run the government. Three, it does nothing for those who live on the dole. It seriously damages their finely-tuned habit of using OUR money to buy votes. Four, if it's not based on an accompanying tax cut then everyone gets hit with a big tax bill come April 15th.

That's about it. I would make a trip to DC to march on Congress if I thought it would force them to use this method of stimulation. For the sake of demonstration, imagine you have a snowball in your left hand and a blow torch in your right hand. There, you've got the idea!