House leaders report progress on plan for economic stimulus

Agreement on flexibility over giving relief to poor families with children helped move the talks forward.

WASHINGTON (AP) — Pushing deficit concerns aside, Democratic and Republican leaders appeared close to agreement with the White House Wednesday night on emergency tax cuts and benefit increases to jolt the economy out of its slump.

“We’ll have more to say tomorrow morning,” said House Minority Leader John Boehner. “We’re hopeful.”

Boehner, R-Ohio, made his remarks exiting his third extended negotiating session of the day with House Speaker Nancy Pelosi, D-Calif., and Treasury Secretary Henry Paulson.

Democratic aides said greater GOP flexibility over giving income tax relief to poor families with children — who would not be eligible under President Bush’s tax rebate proposal — had moved the talks forward.

Lawmakers learned during the day that the government’s deficit already would swell to $250 billion this year because of falling corporate tax revenues — then they signaled they were willing to balloon it higher by more than $100 billion with a stimulus package.

The federal deficit, which has been dropping in recent years, could reach $379 billion for 2008 — more than twice last year’s red ink — once the costs of the economic rescue measures are factored in, said House Budget Committee Chairman John Spratt Jr., D-S.C.

The economic growth measure would add about $116 billion to the deficit for the budget year ending Oct. 1, according to back-of-the-envelope calculations by Spratt. All sides agree that the stimulus measures should be temporary.

Worries about the ailing economy trumped concern over the deficit as top House leaders and Paulson met three times during the day tallying up the cost of various proposals for tax rebates, business tax cuts and benefit increases, including unemployment compensation and food stamps.

Pelosi pressed to make sure tax relief would find its way into the hands of lower-income earners while Boehner pushed to include upper middle-class couples with incomes of up to $130,000 or so, according to congressional aides.

“All of our discussions have been productive and have taken us in a forward direction,” Pelosi said as she left an afternoon session with Paulson and Boehner.

“Until there’s agreement on the entire package, we have nothing,” Boehner cautioned, but he also called the discussions productive.

The rebates are the most costly portion of an emerging $145 billion economic stimulus measure. One option floated by Democrats, said Democratic congressional aides, includes rebates of at least $400 for individuals — distributed to a wide spectrum of workers, including those in lower-income brackets — with couples and people with children receiving more.

Bush backs larger rebates of $800-$1,600, but his plan would miss 30 million working households who earn paychecks but owe no income tax, according to calculations by the Urban Institute-Brookings Institution Tax Policy Center. An additional 19 million households would receive only partial rebates.