Operating in the political environment of a highly charged election year, it was probably not realistic to expect that we would come to agreement around a consensus package that all of us would step back to admire and say, “Well, we nailed those three ‘T’s’ this time.”

It is realistic, though, to hope that we could act expeditiously to pass a package of tax breaks that will add anywhere from 1 to 1 ½ percent to GDP in the second half of this year. And that’s what we’ve done.

We’ve agreed on a plan to send tax rebates to couples whose income is under $150,000 and to individuals whose income is under $75,000 -- $1,200 to couples, $600 to individuals and $300 per child under the age of 17.

The number of Americans eligible to receive rebate checks was expanded somewhat in the Senate to include about 20 million Social Security recipients and roughly 250,000 disabled veterans.  

Included in the stimulus package were a couple of other elements that bear mentioning.  While their impact on the economy may not be felt as immediately as the Federal Reserve’s moves over an eight-day period last month to cut a the federal funds rate – the rate banks charge each other for funds lent overnight – by an unprecedented 1 ¼ percent, these additional steps should have a positive psychological and practical impact.

One element involves encouraging large and small businesses to make new equipment purchases in the months ahead by allowing them to write off, or depreciate, those investments more quickly.

Two other related steps allow a trio of government-sponsored enterprises – the Federal Housing Administration, along with both Fannie Mae and Freddie Mac – to purchase more home mortgages that banks originate and to allow the packaging of those mortgages into securities that can be sold to investors around the world.

Why is this an important element that will help our economy?  Because the ability and willingness of the private sector to become involved in packaging mortgages has all but disappeared over the past six months or so, contributing to the home mortgage crisis that we face today.

It might also be worth mentioning here several proposals not included in the final package that were suggested by the Senate Finance Committee. 

The committee recommended adding an additional 13 to 26 weeks of unemployment benefits, on top of the existing 26 weeks of benefits currently available to workers who lose their jobs through no fault of their own.

Under the Finance Committee’s proposal, workers in states whose unemployment rates were 6.5 percent would have qualified for a limited period of time for an additional 26 weeks of unemployment benefits. 

The threat of a presidential veto killed the inclusion of that provision, along with increasing food stamp benefits in high unemployment states, although most economists argue that those two steps would have been perhaps the most effective ways of lifting the economy right away. If the economy continues to worsen in the months ahead, we’ll likely revisit those ideas.

Meanwhile, the Senate Finance Committee also recommended to the full Senate increasing the amount of money available to states to help low-income families pay their utility bills this winter and to extend by one year tax breaks due to expire later this year that encourage energy efficiency.

Finally, the committee recommended allowing states to issue new tax-exempt bonds to help refinance subprime loans so some families would not lose their homes.  The cost to the Treasury of these additional proposals would have pushed the cost of the entire package to $192.7 billion over a two-year period, compared to the two-year cost of $168 billion for the package that ultimately was enacted.

Let me conclude by saying that, unlike some previous stimulus packages adopted in response to earlier economic downturns, this package was agreed to with a speed and efficiency that you don’t see every day in our nation’s Capitol. We didn’t get bogged down for months haggling over the details and then finally reach agreement only after the country had actually begun to pull out of a recession.

In addition, most of the tax rebates will go to families who truly need the money and will spend it in ways that will help lift our economy starting later this spring.

Is it perfect? No. Will it help? Yes, I think so. Perhaps the most positive aspect of the adoption of this economic stimulus package, coming on the heels of the extraordinary action of the Federal Reserve only a few weeks earlier, is to demonstrate to Americans that our nation’s political leaders can still set aside our differences when the chips are down and quickly adopt a series of steps to help put our economy on the right track later this year. 

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