....One important provision temporarily raises the dollar limit on mortgages that can be bought or guaranteed by government-sponsored mortgage giants Fannie Mae and Freddie Mac. The current limit of $417,000 would rise above $600,000 and perhaps as high as $730,000 in the most expensive areas, congressional leaders said. (See related article.)
The centerpiece of the package is $100 billion in tax credits for an estimated 117 million families this spring. Most individuals who pay income taxes would get $600; working couples would receive $1,200. Workers who make at least $3,000 but don't pay income taxes would get checks of $300 to $600. People in both groups would get $300 credits for each of their children.
Top Democrats said they intend to send a bill to President Bush by Feb. 15. If that happens, rebate checks or electronic transfers would probably arrive between May and July.
Businesses would be able to deduct an additional 50% of the cost of certain investments in 2008. In addition, small businesses would be able to write off more expenses from their taxes: $250,000, up from $125,000.The checks would be gradually phased out for wealthier taxpayers. Couples with income of more than $174,000 would get nothing, unless they have children.
The Dow Jones Industrial Average climbed 108.44 points, or 0.9%, to 12378.61 after a late round of buying stirred by optimism about the stimulus plan.
In crafting the deal, leaders of both parties were forced to give ground. Democrats wanted new spending on food stamps and unemployment benefits, but didn't get it. Republicans held their noses and agreed to $28 billion in credits for 35 million families who don't pay income taxes. They also gave in to the cap that stops wealthier people from getting checks. Bush administration officials had earlier floated a plan to give $800 rebates to all income-tax payers.
"Philosophically, as Republicans, all people who pay taxes ought to get tax relief," said House Minority Leader John Boehner of Ohio after the deal came together.....
The House plans to vote on the bill in early February, bypassing the usual committees....
The Internal Revenue Service expects to be able to begin mailing out checks and making electronic transfers by May, said Mr. Paulson. He told reporters the "lion's share" of payments would be completed within the following 10 weeks.
A small but notable contingent of economists, largely on the right, questioned whether the stimulus was needed at all. Harvard economist N. Gregory Mankiw, a former Bush adviser, argued that the rescue package is overkill at a time when unemployment measures 5%, a low rate historically....Until the plan is final, it is difficult for congressional budget experts to estimate the impact it will have on the federal deficit. But Senate Budget Committee Democrats said Wednesday that a $140 billion stimulus package would add about $100 billion to the deficit in fiscal year 2008, which began in October, bringing the total budget shortfall for the year to about $350 billion.
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