WASHINGTON (Reuters) - Treasury Secretary Henry Paulson warned on Thursday that the $157 billion stimulus package passed by the Senate Finance Committee was too complex and he prefers the simpler House of Representatives version.
“Complexity is our enemy and I’m concerned that the bill that has come out of the Senate Finance Committee is already too complex. Once it gets on the Senate floor it’s in danger of looking like a Christmas tree,” Paulson told a news conference to highlight the Earned Income Tax Credit for low-income workers.
Paulson urged swift Senate action on the bill but cautioned senators not 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 taxpayers rebates of $500 for individuals and $1,000 for couples, including some 20 million senior citizens that would not receive checks under the $146 billion House bill.
The Senate measure as passed also would extend unemployment benefits beyond the 26 weeks offered by most states and offer nearly $6 billion in 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 for the tax rebates by doubling the phase-out income levels to $150,000 for individuals and $300,000 for couples. Many economists say rich taxpayers are more likely to save the rebates, negating their stimulative value.
Low-income and unemployed people are viewed as more likely to spend the cash immediately on necessities such as food and gasoline, flushing it through the economy more quickly.
Paulson made his remarks at a news conference to highlight the Earned Income Tax Credit, which will provide low-income workers with a credit as high as $4,716 this year for a family with two or more children.
Asked about the plight of private bond insurers that are struggling to maintain the top credit ratings necessary for the business, Paulson said the Treasury was monitoring the situation along with state insurance regulators and private sector companies.
“If you’re in the financial services industry and you need capital or think you may need capital, I’m very much urging every organization and every institution to raise capital when they can get it,” Paulson said. “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 the situation said last week that the Treasury had shown “some reluctance to create another government backstop” for bond insurers.
Editing by Richard Satran