US Senate backs stimulus for ailing economy

[Ron Burgundy]

AFP - The US Senate on Thursday overwhelmingly approved a giant economic stimulus plan sought by the White House amid mounting fears that the world's biggest economy could be sliding into a recession.

Senate lawmakers voted 81-16 to approve the economic aid package, essentially clearing the way for the measure to be signed into law by President George W. Bush.

Bush immediately hailed the bill's passage, amid a worsening housing market downturn and a dramatic slowdown in American economic growth, suggesting he would give it a quick endorsement.

"This plan is robust, broad-based, timely, and it will be effective. This bill will help to stimulate consumer spending and accelerate needed business investment," Bush said in a statement released by the White House.

The entire package, which is stuffed with temporary tax rebates and business incentives, is valued at around 150 billion dollars. Tens of millions of Americans are likely to receive tax rebates in coming months after Bush has given the stimulus his official blessing.

Treasury Secretary Henry Paulson also welcomed the Senate's approval of the package, saying it would help inject money into the stressed US economy.

"This package of payments to individuals and incentives for businesses to invest will support our economy as we weather the housing downturn," the Treasury secretary said.

Democratic and Republican senators had sparred over different incentives after the House of Representatives passed its own version of the economic plan last Tuesday.

The Democratic-controlled Senate approved an amended version of the House measure which senators changed to include tax rebates for low-income retirees and military veterans among other measures.

Congressional officials said the House would vote imminently on the amended Senate version of the package so the legislature could send the bill to Bush for his approval.

The House-backed plan calls for tax rebate checks of up to 600 dollars for individual taxpayers and up to 1,200 dollars for couples, plus additional cash for dependent children.

Democratic senators and lawmakers from Bush's Republican Party appeared pleased with the Senate measure.

"Today's agreement is a victory for a better, more effective economic stimulus. Economists agree that consumer spending, fueled by tax rebates, can boost America's economy," said Democratic Senator Max Baucus.

Senator Mitch McConnell, the Republican leader in the upper chamber, said:"

This is not a victory for Republicans or Democrats. This is a victory for the American people."

It's unclear, however, how much of a boost the vast package will give the troubled economy. Some economists have expressed doubts about whether the plan will deliver a needed shot-in-the-arm to growth.

The measure's success will depend in part upon whether Americans spend their rebate checks or save them in bank accounts.

Political concern about the economy has increased amid a two-year long housing slump and a related credit crunch.

The Federal Reserve has slashed interest rates since September in a bid to fire up economic momentum which slowed significantly to a 0.6 percent annualized crawl during the fourth quarter of last year.

Paulson said the government could start mailing out tax rebates to those eligible to receive them by early May. He said most rebate checks could be sent out during the summer.

source: http://news.yahoo.com/s/afp/20080207/ts_afp/useconomygrowthpolitics [link]