WASHINGTON (Reuters) – Treasury Secretary Henry Paulson warned onThursday that the $157 billion stimulus package passed by the SenateFinance Committee was too complex and he prefers the simpler House ofRepresentatives version.
"Complexity is our enemy and I’m concerned that the bill that hascome out of the Senate Finance Committee is already too complex. Onceit gets on the Senate floor it’s in danger of looking like a Christmastree," Paulson told a news conference to highlight the Earned IncomeTax Credit for low-income workers.
Paulson urged swift Senate action on the bill but cautioned senatorsnot to load the bill up with pet spending projects and more tax breaks.He said the House resisted that temptation and its bill was simple,broad-based and bipartisan.
"I wish it were on the president’s desk today so that we could sign it and start working to get the checks out," he said.
The Senate Finance Committee’s bill would offer nearly all taxpayersrebates of $500 for individuals and $1,000 for couples, including some20 million senior citizens that would not receive checks under the $146billion House bill.
The Senate measure as passed also would extend unemployment benefitsbeyond the 26 weeks offered by most states and offer nearly $6 billionin tax breaks for the renewable energy sector.
Those provisions are not included in the House bill, which calls for tax rebates of $600 for individuals and $1,200 for couples.
The Senate bill also would make higher income people eligible forthe tax rebates by doubling the phase-out income levels to $150,000 forindividuals and $300,000 for couples. Many economists say richtaxpayers are more likely to save the rebates, negating theirstimulative value.
Low-income and unemployed people are viewed as more likely to spendthe cash immediately on necessities such as food and gasoline, flushingit through the economy more quickly.
MISSING OUT ON CASH
Paulson made his remarks at a news conference to highlight theEarned Income Tax Credit, which will provide low-income workers with acredit as high as $4,716 this year for a family with two or morechildren.
Asked about the plight of private bond insurers that are strugglingto maintain the top credit ratings necessary for the business, Paulsonsaid the Treasury was monitoring the situation along with stateinsurance regulators and private sector companies.
"If you’re in the financial services industry and you need capitalor think you may need capital, I’m very much urging every organizationand every institution to raise capital when they can get it," Paulsonsaid. "Again, I think that’s the theme for the private bond insurers,there’s a lot of focus on market-based solutions here."
A financial services sector source in Washington familiar with thesituation said last week that the Treasury had shown "some reluctanceto create another government backstop" for bond insurers.
(Editing by Richard Satran)
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