House to seek $825 billion in economic stimulus

By Richard Cowan

WASHINGTON (Reuters) - Democratic leaders in the House of Representatives unveiled an $825 billion tax cut and spending bill on Thursday they hope will help President-elect Barack Obama reverse the steep decline in the U.S. economy.

The bill, which would add to an already massive $1.2 trillion budget deficit forecast for this year, would combine $550 billion in emergency spending initiatives with $275 billion in temporary tax benefits over the next two years.

The goal of the legislation, according to House Speaker Nancy Pelosi, a California Democrat, is to create and save up to 4 million jobs in an economy that has suffered through a recession for more than a year.

"We wanted to get the biggest bang for the buck of every dollar spent without having the package be so big that it's weighed down" with unnecessary deficit-spending, Pelosi said.

Obama has called on Congress to act quickly or risk seeing the economy deteriorate further.

House Minority Leader John Boehner, an Ohio Republican, said the bill would call for "questionable new government spending on programs and projects, while providing less tax relief for middle-class families and small businesses" than Obama had proposed.

Pelosi acknowledged that the unveiling of the proposal was only a "first step" in what will be a month-long legislative push in Congress.

House Appropriations Committee Chairman David Obey, a Wisconsin Democrat who played a central role in developing the bill, warned $825 billion could "undershoot" what is needed.

"This is the largest effort by any legislative body on the planet ... to prevent an economic catastrophe," Obey said, adding, "We may need to do more at a later date" because of the rapid deterioration of the U.S. economy, he said.

Next Wednesday, one day after Obama is sworn in as president, Obey's committee plans to have a detailed review of the bill, giving Republicans an opportunity to offer changes.

The House Ways and Means Committee will oversee the tax provisions and a third panel will examine energy issues proposed in the bill.

HELP FOR HOUSING MARKET

One of the tax proposals aims to get cash flowing immediately to home builders and others hit hard by a housing-market bust. It would allow businesses to write off current losses against the past five years of taxes. Current law provides for a two-year window for the write-off.

But companies that have benefited from funds distributed under a separate $700 billion government bailout program would not be allowed to claim the enhanced tax break.

The proposal also includes other tax breaks for business investment and makes good on an Obama campaign pledge to give workers a refundable $500 tax credit and $1,000 per couple.  Continued...