Package Omits UI, Food Stamp Provisions Within the last hour, word has emerged that Congress and the White House have agreed on key terms of a fiscal stimulus package. A story appearing in the electronic version of the Washington Post reports that House Speaker Nancy Pelosi (D-CA) and Republican Leader John Boehner (R-OH) reached agreement in principle in a telephone call Thursday morning. The tax rebate terms:

• the compromise package is not to include increases in food stamp and unemployment benefits
• it will provide tax rebates of at least $300 for almost everyone earning a paycheck, including low-income earners who make too little to pay income taxes
• families with children would receive an additional $300 per child, subject to an overall cap of perhaps $1,200
• the rebates would be capped, limited to individuals earning $75,000 or less and couples with incomes of $150,000 or less

Taken alone, these provisions would bring the cost of the package down significantly from the $145 billion proposed by the administration and blessed by congressional leaders last week. But a package is said to include tax breaks for businesses including:

• incentives to invest in plants and equipment
• 50 percent bonus depreciation
• a five-year net operating loss carryforward for small businesses
• provisions to allow businesses suffering losses now to reclaim taxes previously paid

totaling about $70 billion, fully half of the package and a much greater portion of it than had been discussed earlier. Progressive activists and labor unions are likely to object strenuously to the omission of unemployment insurance extensions and increased food stamp assistance. Independent economic analysis indicates that the efficiency of the stimulative impact these two components provide ranks near the top among the various components under consideration for the package: