In rare agreement, Congress OKs rebate checks

After two weeks of intense negotiation, Congress rallied bipartisan votes to pass a $152 billion stimulus plan to jolt a sluggish economy.

The plan aims to get rebate checks to more than 130 million American families, to increase investment tax breaks, and to expand refinancing opportunities in the housing market. It passed the Senate by a vote of 81 to 16 on Thursday and, just hours later, by a House vote of 380 to 34.

"This economic-growth package is an example of bipartisan cooperation at a time when the American people most expect it," said President Bush in a statement after the final House vote.

This rare surge of bipartisanship followed close consultation among congressional leaders and Treasury Secretary Henry Paulson – and a full-court press from lobbyists and constituents eager to know when their check would be in the mail. (Answer: Taxpayers who file their 2007 tax returns on time can expect checks as early as May.)

At the heart of the deal are hundreds of dollars in "recovery rebate" checks to consumers and tax breaks to businesses. To qualify for rebate checks, individuals have to be legal residents of the United States and earn at least $3,000, including Social Security income and veterans' disability payments. Checks range from $300 to $600 for individuals and $600 to $1,200 for married couples, plus an additional $300 for each child.

Two key compromises paved the way for the agreement: A House deal that expanded eligibility for rebate checks to lower income groups and a Senate deal that added seniors and disabled veterans, while drawing the line on adding anything else.

Negotiations over a stimulus plan began in the House, where Democratic leaders convinced the White House to expand eligibility for rebate checks to some 35 million working families who made too little to pay income taxes – and phase out those with adjusted gross incomes of $75,000 for individuals and $150,000 for married couples.

"For the first time, tens of millions of low-income working people, who have been excluded from past stimulus laws, will benefit from recovery rebates and the child tax credit," said House Speaker Nancy Pelosi in a statement on Thursday.

The first draft of a stimulus plan, announced on Jan. 24, easily passed the House but appeared to bog down this week in the Senate. Senate Democrats, backed by eight Republicans, tried to add $43 billion in additional spending to the package, including extended unemployment benefits, alternative-energy tax credits, home-heating subsidies for low-income households, public works projects, and more support for nutrition programs.

But they fell one vote short in a high-profile vote on Wednesday. At the request of Senate majority leader Harry Reid, Sens. Hillary Clinton (D) of New York and Barack Obama (D) of Illinois came off their presidential campaigns to return to Washington to vote for the measure. Sen. John McCain (R) of Arizona, the leading GOP contender, was the lone Senate absentee.

The battle for the final Republican vote went on until Senator Reid agreed to allow a GOP amendment to the bill, which added 20 million seniors and 250,000 disabled veterans to the list of those receiving rebates under the House plan. They also voted to close a loophole that critics said could have allowed rebate checks for those working in the US illegally.

"I've been home quite a bit lately and that's what people have been talking about: seniors, veterans, and immigration. That was the glue that kept this deal together," says Sen. Ted Stevens (R) of Alaska, who drafted the GOP amendment.

Democrats and outside groups repeatedly lobbied a handful of Republican senators in a bid to tip the vote toward a larger stimulus bill. The AARP, the largest lobby for people over 50, ran full-page ads on the theme: "Millions of people are watching how their Senators vote on Economic Stimulus – no pressure."

In separate press releases after the larger-stimulus package failed, the Democratic Senatorial Campaign Committee targeted both Senate minority leader Mitch McConnell (R) of Kentucky and Sen. John Sununu (R) of New Hampshire as having cast the "deciding vote" against tax rebates for seniors and veterans. Both senators, up for reelection in 2008, voted for the final version of the bill.

Still, nearly half of the Senate Republican caucus ignored the pressure and opposed the bill.

"They were looking at Alaska's [high] unemployment statistics, and thought I'd have pressure to vote for extending unemployment insurance. But I had problems with the underlying premise of the bill," says Sen. Lisa Murkowski (R) of Alaska, who voted against both versions of a stimulus bill.

"It's just handouts to buy votes," said Sen. Jim DeMint (R) of South Carolina, one of 16 GOP senators who voted against the bill.

Sen. Pete Domenici (R) of New Mexico, who voted with Democrats on an expanded version of a stimulus bill, said that what moved his vote was recent bad economic news. "We clearly face the possibility of a recession," he said on the floor of the Senate on Feb. 6.