Congress Passes Katrina Tax Breaks

$6.1 Billion Aid Package For Hurricane Victims Sent To President

(CBS/AP)  Worried about surviving yet another powerful hurricane, victims of Katrina's winds and floods are about to get some tax help to recover from the first one.

Congress passed $6.1 billion in tax breaks Wednesday to help families recover and to encourage Gulf Coast businesses to reopen their doors, or at least keep employees on the payroll. The bill went to President Bush after a 422-0 House vote and a Senate voice vote.

Most of the tax help is directed specifically at those hit by Hurricane Katrina and would not necessarily apply in other regions damaged by hurricanes before the end of the storm season. As the House voted, Hurricane Rita was bearing down on the Gulf coast west of Katrina's landfall.

"This aid comes at exactly the right time to help victims of Hurricane Katrina as they rebuild their lives," said Treasury Secretary John Snow.

Rep. Jim McCrery, R-La., said tax writers aimed most of their assistance at individuals, and the tax breaks for businesses mean "those businesses, we hope, will be employing and paying residents of the affected area."

Lawmakers intend to follow the immediate aid with a broader package of tax breaks to encourage rebuilding of damaged infrastructure and commerce, particularly in New Orleans. President Bush proposed creating a Gulf Opportunity Zone with about $2 billion in special tax breaks encouraging businesses to build or expand in the region.

Congress first responded to the hurricane's devastating blow by spending more than $62 billion for recovery and rescue efforts. The price tag, expected to increase, has caused wrangling within the GOP over whether to cut government spending elsewhere to defray Katrina's costs.

Speaker Dennis Hastert, R-Ill., rejected calls to delay a Medicare prescription drug benefit or rescind recently passed "pork barrel" highway projects, but a band of almost two dozen conservatives announced proposals to take both steps. The conservatives claim momentum as the burgeoning costs of Katrina have put a renewed focus on the deficit.

"We do not have to raise taxes" to finance the recovery from Katrina, said Rep. Jeb Hensarling, R-Texas. "We do not have to pass debt onto our children."

The group of House conservative stalwarts announcing "Operation Offset" before a phalanx of television news cameras acknowledged that they had no agreement among themselves on a more than $500 billion roster of ideas to cut spending, many of which — such as cutting public television subsidies — have been resoundingly rejected.

It's unlikely any of these can pass, reports CBS News Correspondent Bob Fuss, but the group has hit a nerve here as Republicans who normally stand by the president become increasingly nervous about continually voting to put the country deeper into debt.