The proposal, a blend of Democratic and Republican ideas, focuses on the tax cuts that President Bush seeks and does not include most of the Democratic government spending items the president opposes. Republicans last week used a procedural vote to block a Democratic package on the Senate floor but the GOP also doesn't have the votes for the president's plan.
Treasury Secretary Paul O'Neill discussed the centrist package Monday in a conference call with six members of the Senate's Centrist Coalition, including Democrat John Breaux of Louisiana and Republican Olympia Snowe of Maine. O'Neill said Tuesday that the package "has most of the elements in it the president has proposed."
"I think there's a basis here for a deal," O'Neill said on ABC's "Good Morning America."
Administration officials cautioned that O'Neill did not flatly endorse the entire plan but wants to reach out to Democrats interested primarily in tax cuts instead of increasing spending to boost the lagging economy. Democratic Sens. Zell Miller of Georgia and Ben Nelson of Nebraska, along with independent Sen. James Jeffords of Vermont, have also been pushing the package.
Tax cuts in the plan include $26 billion for a bonus 20 percent depreciation write-off for business for one year, $4.5 billion for businesses to deduct current losses against taxes paid up to five years ago and $852 million in enhanced expensing deductions for small businesses.
The plan would accelerate reduction in the 27 percent income tax bracket to 26 percent from 2004 to 2002, enlarge by $1,000 the income subject to the new 10 percent tax bracket and authorize $14 billion for a new round of rebate checks aimed at lower-income workers.
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The centrist package also creates a new tax credit to help laid-off workers with 50 percent of the costs of COBRA health insurance policies, extends all unemployment benefits by 13 weeks and allows $5 billion in grants to states for jobless assistance.
"We've taken the best features of the Democratic and Republican bills and packaged them in a way to get the most bipartisan support of anything that's out there," Breaux said in an interview.
The legislation does not include a $15 billion package of homeland security spending that Senate Democratic leaders have insisted must be a part of any stimulus plan. Breaux suggested that in order to get a deal, that issue would likely have to be negotiated separaely.
The move by O'Neill to reach out to centrists could mark a renewed push by the administration to finalize a stimulus plan before Congress quits for the year. Breaux said it will take vigorous administration lobbying to break the logjam.
"What they have to do is offer encouragement with all of the principles to try to broker something they can sign," Breaux said.
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