US Congress and White House ink stimulus deal

24 January 2008 21:08  [Source: ICIS news]

WASHINGTON (ICIS news)--The White House and Congress reached agreement on Thursday on an economic stimulus measure that will pump an estimated $150bn (€102bn) into the US economy with personal and business tax breaks.


House Speaker Nancy Pelosi (Democrat-California) said congressional Democrats and Republicans and President George Bush had reached agreement on the broad terms of a stimulus package, and she said she expects the House and Senate will move quickly to pass enabling legislation by April.


She said the stimulus package will provide about $100bn in tax rebates to US consumers, with $600 for individual tax filers and $1,200 for a married couple. Those with dependent children would also receive $300 per child.


Those payments will include some $28bn in payments to poor families who ordinarily would not owe taxes.


Altogether, about 150m US families are likely to see some sort of payment under the stimulus plan.


For businesses, the agreement will make some $50bn available in tax credits or deductions.


For example, under the plan companies making investments in new facilities or equipment will be allowed to deduct 50% of the value of those expenditures from their taxes if purchases are made this year. Ordinarily only a 25% deduction would be allowed in the first year of capital investments.


Small businesses also will be allowed to take additional deductions for equipment purchases made this year.


Bush said the deal with the Democrat-controlled Congress “will lead to higher consumer spending and increased business investment this year”.  The stimulus package “has the right set of policies and is the right size … that will boost our economy and encourage job creation”, he said.


The plan also includes mortgage lending reforms that Pelosi said will allow many families facing foreclosure to refinance their home loans.


This provision will in part address the continuing downturn in the US home building industry, a key consuming sector for chemicals manufacturing.


While the White House and Congress have agreed on the broad terms of the stimulus package, House and Senate leaders will have to draft specific legislation to implement the plan.


Pelosi said she hopes Congress can complete that work and get a bill to the president’s desk so that payments can go out to the public by June.


($1.00 = €0.68)

By: Joe Kamalick
+1 713 525 2653

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