Senate moves toward stimulus showdown

By Donna Smith

WASHINGTON (Reuters) - The Senate moved closer on Monday to a showdown over an economic stimulus plan, with Democrats looking to offer a bigger package providing more benefits to more people than White House-backed legislation passed by the House of Representatives.

The Senate voted on Monday to begin debate on the $146 billion House bill, but Senate Majority Leader Harry Reid said he planned to offer a substitute that builds on a $157 billion package of business tax breaks and tax rebates for individuals and businesses approved by the Senate Finance Committee last week.

"All Americans should know that their rebate checks will not be delayed a single minute as a result of our debate," Reid told the Senate. A vote on the package could occur on Wednesday at the earliest when Democratic presidential contenders Sens. Hillary Clinton and Barack Obama will have returned to Washington from campaigning for presidential nominating contests in more than 20 states on Tuesday.

The House-passed bill would give individuals a one-time $600 payment and couples $1,200 plus $300 per child. The tax rebates would begin phasing out for individuals earning more than $75,000 and married couples making more than $150,000. The Senate panel would allow for $500 and $1,000 payments, respectively, but with much higher income caps and to more people.

The White House backs the House bill because it includes no spending for added unemployment insurance benefits or other government programs and it has urged the Senate to pass the House bill without change.

The Senate Finance Committee bill would extend flat $500 rebates for individuals, and $1,000 a couple plus $300 per child to tax filers covered by the House bill plus about 20 million retirees on Social Security and about 250,000 disabled veterans. The Senate bill also includes more generous tax breaks for businesses than the House bill and about $6 billion in tax incentives for wind and other alternative energy resources.

Finance Committee Chairman Max Baucus, a Montana Democrat, said he believed his panel's bill could win the 60 votes needed in the 100-member Senate to pass major legislation. The AARP, which represents millions of retirees, along with home builders, who would be helped by a provision allowing them to write off current losses against previous tax years, labor unions and other groups have been pushing for the Senate Finance Committee bill.

That bill would extend unemployment benefits beyond the 26 weeks offered by most states. It would also tighten language to ensure illegal immigrants did not benefit from the tax rebates.

Reid said his substitute would include provisions in the House bill to help prop up the troubled housing market by allowing the Federal Housing Administration, as well as housing finance giants Fannie Mae and Freddie Mac, to back larger loans.

Reid said he also planned to include about $1 billion to help low-income Americans heat their homes through the Low Income Home Energy Assistance Program, a provision that could win support from Northern Republicans.

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