Senate sets economic stimulus debate next week

WASHINGTON (Reuters) - The U.S. Senate on Thursday pushed back until next week a showdown on an economic stimulus package, with Democrats seeking to expand the tax rebates and other benefits approved by the House of Representatives.

Senate Majority Leader Harry Reid, a Nevada Democrat, called the $146 billion bill that passed overwhelmingly in the House on Tuesday a "good package." But Reid said he was supporting a broader bill approved on Wednesday by the Senate Finance Committee.

Reid said he expected the Finance Committee measure to be blocked by Senate Republicans on Monday, which would open the door to votes on several other ideas on stimulating the economy, which some fear could be headed toward recession.

The House-passed bill would give individuals a one-time $600 payment and couples $1,200. The tax rebates would begin phasing out for individuals earning more than $75,000 and married couples making more than $150,000. The Senate panel would allow for $500 and $1,000 payments, respectively, but with much higher income caps and to more people.

The apparently doomed Senate Finance Committee measure would cost $157 billion next year and would provide quick tax rebates to more Americans and also include senior citizens who receive Social Security retirement benefits but do not have earned income. Tacked onto this package were energy tax benefits not included by the House.

Reid sketched out a series of votes he intends to call next week in the Senate, which could culminate in passage of an amended House bill to include cash payments to 20 million elderly not covered in that measure as well as expanded unemployment benefits and payments to 250,000 disabled veterans.

"I don't think that the Senate wants to deprive 20 million seniors of a rebate check," said Finance Committee Chairman Max Baucus, a Montana Democrat.

The Senate was expected to begin consideration of the bills passed by the Senate Finance Committee and House as early as Thursday, but Reid decided to postpone action until next week.

CLOSE VOTES

With many of the votes expected to be close, Reid said he planned to ask two Senate Democrats running for president -- Hillary Clinton of New York and Barack Obama of Illinois -- to interrupt their campaigns and return to the Senate to be counted.

Reid said he expected Sen. John McCain, an Arizona Republican running for president, also to be there.

The Bush administration wants the Senate to simply embrace the House bill, which it negotiated this month with Democratic and Republican House leaders. On Thursday, Treasury Secretary Henry Paulson called the Senate Finance Committee measure "too complex."

If the Senate passes its own package, differences would have to be resolved with the House and the administration before a final bill could be sent to Bush to sign into law.

Sen. Charles Schumer of New York, a member of the Democratic leadership, voiced confidence that a bill would soon be finalized.

"We will have a package on the president's desk (by mid-February)," Schumer said. "It will be a very, very good package -- hopefully a package with unemployment insurance and benefits to seniors and disabled benefits in it."

A slowing U.S. economy has prompted the White House and lawmakers from both parties to rush passage of a bill intended to put cash into millions of consumers' hands this spring and summer in the hope they quickly will spend it, boosting the economy.

Reid said he also would allow senators to vote on other initiatives, including giving more help for low-income people to pay for winter heating bills and temporarily expanding benefits for the poor who rely on food stamps.

Another vote would be scheduled, Reid said, on raising the amount of tax-exempt mortgage revenue bonds that states can offer to help fund low-income housing and low-interest mortgages so that some homeowners would not face foreclosure.

In the final package, lawmakers are expected to prohibit any of the tax rebates from going to illegal immigrants working in the United States.

(Editing by Eric Beech)