$789 billion package; 65/35 split between spending and tax cuts

[BeyondGeography]

...Sen. Max Baucus, D-Mont., one of the negotiators, said there was agreement to hold the bill to $789 billion, tens of billions below the cost of both the House and Senate bills that had cleared in recent days, and that 35 percent of the total would be in the form of tax cuts.

...Negotiators tentatively agreed to include a one-time payment to recipients of Social Security, Supplemental Security Income and veterans' pensions and disability. While the size of the checks remained unsettled, officials said it would be less than the $300 originally proposed by the Senate.

Officials said there was agreement to accept the White House's call to provide the tax break to workers who pay Social Security taxes but do not earn enough to owe income taxes, although it was possible the amount would be scaled back somewhat. The president sought $500 for individuals and $1,000 for couples.

Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said. The agreement would allow taxpayers to deduct the sales tax paid on new car purchases, but not the interest on loans for the same vehicles.

It also appeared a compromise was in the works on the administration's demand for school construction funds...

http://news.yahoo.com/s/ap/20090211/ap_on_go_co/congress_stimulus

[WI_DEM]

1. I'm pleased that more will be on spending than the 58/42 in the senate bill

if this comes to be.

[vaberella]

2. I couldn't agree with you more. I was a bit annoyed by the high level of tax cuts. n/t

[jefferson_dem]

3. Excellent.

Let's hope they finish the job with a vote tomorrow. Hang the "do nothing" Repub bastards out to dry.

[MadBadger]

4. That split is good news.

[incapsulated]

5. Good! n/t

[Puzzler]

6. Oh no! You mean Obama is not going to get 100 senate votes...

... for the stimulus package? Let's raise the bar MSM-style!

[Dawgs]

7. Exactly. After this thing passes it will be Obama's fault for not getting more Republicans votes.

Instead of 'Republicans can only get 37% of Senators to vote against the stimulus bill', or 'Obama's bill passes with large majority of Senators voting for it'.

[DCBob]

40. It will be interesting to see if all the House Dems are now on board...

I believe 11 (the bluest of the blue dogs) voted against it the first time around. I suspect they will be -- might even get a few Rs this time.

[nichomachus]

8. So, basically it's a $512 billion stimulus

the rest is just a payoff to the ultra wealthy to get the GOP to vote for it.

And who says we don't have bribery in the US?

[Zynx]

9. That tax cuts are not marginal tax rate reductions. The rich won't see the vast bulk of them.

Tax cut need not equal wealthy give aways.

[Beetwasher]

10. How Will The Tax Cuts Work??

Will there be checks again??? :shrug:

[nichomachus]

11. Yeah -- those $300 checks worked so well the last time

[Beetwasher]

14. ?

That doesn't answer my question.

[nichomachus]

18. I don't think anyone's quite sure yet

One thing they're doing is tinkering with the alternative minimum tax -- which they were going to do anyway, so that's kind of bogus.

But you can be pretty sure that if the GOP went along with it, it's not going to have a long term benefit for most of us. It's will just be another way to starve the government of much-needed money, causing it to reduce even more government programs -- such as for children, health care, the elderly, education, etc.

[Zynx]

16. There's evidence that they made consumption higher than it otherwise would have been.

There's a reason that a lot of economic statistics were surprisingly strong in the second quarter of 2008.

[nichomachus]

17. A flash in the pan -- no long term benefit

[Zynx]

19. No, but there is some benefit if you time it right.

For example, doing it in the teeth of an economic slide is not much good, but doing it as you are beginning to find a bottom could be helpful as other programs kick in.

[onenote]

13. Generally speaking, no.

There was a provision in the legislation for a one-time $300 payment to social security beneficiaries and disabled veterans, but I don't know whether it was eliminated or altered in the compromise. But otherwise, its not a "stimulus check" sort of thing.

[Beetwasher]

15. The SS Payments Are Still In, But It Will Be Less Than $300

So if it's not a check, they will lower your payroll taxes?

[high density]

23. I doubt it. I think your withholding will go down

So if you get a $500 cut and get paid 26 times a year, it's time to party with an extra ~$20 in each paycheck. ;)

[Abq_Sarah]

38. No.

You will receive an extra $13.00 per week in your take home pay starting in June. By next January, it will be reduced to $8.00.

[onenote]

12. so basically you don't know what the tax cut provisions in the bill are

Its not all, or even mostly, big tax breaks for the rich. Its things like deductions on new car purchases and on energey efficient investment, and breaks for low income taxpayers.

[Uzybone]

28. Its sad to see people who have no idea what they are posting about

the tax cuts in the package are not geared to the rich.

[4lbs]

20. I thought nearly all the tax cuts were the ones promised by President Obama last year

during the campaign.

You know, tax cuts for everyone making less than $120K per year. Their federal income tax brackets and rates will go lower. Also, everyone making less than $20K and seniors retired on Social Security up to $50K won't pay any taxes.

[Still Sensible]

22. They are... so many here see the words "tax cut" and

immediately tune out...not even knowing what they mean in the context of this bill. Obama campaigned on "middle class tax cuts" and not for the wealthy. The personal income tax cuts in this bill are probably not quite as far as he wanted to. Essentially it's $400/yr for single and $800/yr for couple. It is NOT a tax rebate check, it is more money in the paycheck each week (with a corresponding drop in the tax rate so you don't give it back April 15). It starts decreasing at $70,000 (single) and is cut off entirely for individuals making over $140,000. That's my understanding.

[4lbs]

24. Yeah, that's pretty much what he campaigned on.

I'm sure that as the economy rebounds, he'll press for more comprehensive middle class tax cuts.

[ProgressiveEconomist]

27. LINK to the Urban Institute/Brookings summary of the original plan

Obama campaigned on for a Making Work Pay refundable tax credit:

http://www.taxpolicycenter.org/taxtopics/makingworkpay.cfm .

Notice that the idea was to offset part of the employee's half of the Social Security payroll tax. To get the full $500 per worker, the worker would have to have at least $500/0.062 =~ $8100 in earnings subject to payroll tax. I'd imagine this principle still would be implemented if the maximum credit were reduced below $500 per worker.

[Paulaguyon]

31. don't people making less than 20k pay no taxes anyway?

Just asking. Not sure.

[quakerboy]

37. That is incorrect

particularly in the 18-24 age bracket, they do pay taxes.

[depakid]

21. Appeasing the so called "moderates" is going to cost the country dearly

Cutting federal revenue sharing to the states is going seriously blunt any stimulus effect of this bill- as states will have to either raise taxes or engage in major cutbacks.

Heck of a job!

The "leadership" must really be looking forward to 2010....

[anonymous171]

25. They can put that in another bill. nt

[depakid]

26. Sure the can sure they can...

And just how much support do you thing THAT bill would get?

LOL.

Americans are already growing weary of bailouts- and now that it's pretty well assured that November 2010 is going to look a lot worse than 2009 (thanks to the pandering) You can pretty much count on major Republican gains.

Less than 1 month in, with unprecedented political capital- and the Dems have already managed to squander their fortunes and embolden the Republicans.

That impressed even me-

[EraOfResponsibility]

30. Free Republic is that way ------------>

[depakid]

32. From the looks of the polcy decions- or understanding of economics

It looks to be right here on certain days.

[leftofthedial]

29. so, that leaves $513 billion of stimulus and $276 billion of anti-stimulus,

for a net gain of $276 billion of real stimulus in the face of a $2 trillion to $4 trillion problem . . .

I can just smell that job a-comin! (in seven or eight years).

[onetwo]

33. Some of those tax cuts are aimed at the middle class and lower. That still counts as stimulus.

[leftofthedial]

36. Ready! Fire!

Aim!

[Zynx]

34. The tax cuts are not subtractive. Even if they were marginal rate reductions, which they aren't,

they would be at worst neutral, and even under a realistic worst case scenario they would stimulate the economy by maybe 25% of their cost. That would put your crazy definition at about $600 billion against a $2 trillion output gap. Put a multiplier of 1.6 on that, you're at $1 trillion. That's hardly something to sneeze at.

You have a very simplistic notion of the world. Thank god not too many people are like you.

EDIT: Good thing not too many people are as bad at back of the napkin math as me.

[leftofthedial]

35. thank god

and pass the plate

[GeorgeGist]

39. When all is said and done ...

all the spending and tax cuts will be consumed by profit. And those who work for a living will own the debt. Heckuva job, Barry.

[democrattotheend]

41. That's better than we had hoped for, I think

I'm surprised it was less than 40% tax cuts...that's great news. Honestly, I don't even care about the ideology...I just want this thing to work, because our country's future depends on it.