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New Mexico delegates disagree on what should go in stimulus package

By James W. Brosnan
Wednesday, January 23, 2008

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WASHINGTON — Lawmakers from New Mexico agree on the need for speed, but not the details of legislation to try to jolt the economy from the path toward recession.

Sen. Pete Domenici, an Albuquerque Republican, said the size of the package being discussed by President Bush and congressional leaders — $145 billion — is probably "too little, too late."

"I think we should consider a larger plan, possibly as much as $300 billion. This would allow us to offer significant rebates to a broader range of Americans," he said. "We could also give the economy the shot in the arm it needs by offering strong tax incentives to help small businesses, the manufacturing sector and the renewable energy."

White House officials and House Republicans have been discussing tax rebates of up to $800 for single tax filers and $1,600 for married couples.

But critics say that would leave out as many as 120 million Americans — 40 percent of the population. That group does not file income tax returns or gets a rebate for the full amount of their non-Social Security taxes because their incomes are low.

In New Mexico, about 38 percent — 318,744 out of 840,391 tax filers — paid no income tax in 2006, according to the independent Tax Foundation.

Domenici said he would support sending checks to any tax filer, including low-income working families who qualify for the Earned Income Tax Credit.

Sen. Jeff Bingaman, a Silver City Democrat, said he could support "stimulus" checks, but wants a broader package that would get money into consumers' pockets more quickly, such as extending unemployment benefits, which normally run out after 26 weeks, or increasing food stamps.

There were 34,600 New Mexico workers, 3.7 percent of the 945,200 workers, receiving unemployment benefits as of December, according to the U.S. Bureau of Labor Statistics. There were 91,179 New Mexico households receiving foods stamps as of October, according to the U.S. Department of Agriculture. Average payment was about $225 a month.

It would be May or June before the Internal Revenue Service could send out rebate checks, the director of the Congressional Budget Office, Peter Orszag, told Bingaman and other members of the Senate Finance Committee at a hearing Tuesday.

"So you're talking about mid- to late summer, at the earliest, for people to actually receive funds through a tax rebate," asked Bingaman.

"And that's when the process starts," Orszag said. "It would also take perhaps eight to 10 weeks to distribute the checks."

Not surprisingly, Bingaman and Domenici are considering energy alternatives to add to the package.

Bingaman asked Orszag about adding money to a $2 billion-a-year federal program that helps the poor pay their heating and cooling bills. Orszag said the problem is that winter is already nearing an end.

Domenici is proposing to extend renewable energy tax credits for wind and solar projects.

Domenici and other Republicans scuttled those extensions last year when Democrats wanted to pay for them by raising taxes on big oil and gas companies. But if added to the stimulus package, the tax incentives would not have to be offset with revenue increases.

Bingaman spokeswoman Jude McCartin said the senator will push strongly for a "green" tax package this year, but not as part of a short-term economic stimulus bill.

Since Republicans defeated the tax extensions last year, a German company, Schott Solar, has announced plans to invest $100 million in a plant in Albuquerque to make solar power equipment. It would initially employ 350 people but could expand to 1,500 depending on the growth of solar energy use in the United States.

Rep. Heather Wilson, an Albuquerque Republican who has pledged to support extension of the renewable tax credits, said the stimulus package should focus on encouraging small business investment, "where seven of 10 new jobs come from, and reinforcing consumer confidence."

"Measures should not include tax increases or frivolous spending that doesn't encourage economic growth," Wilson said in a statement.

Rep. Tom Udall, a Santa Fe Democrat, said he would consider all "workable options," including rebates, unemployment benefits and renewable energy tax credits that "quickly put dollars in the hands of Americans who will spend it, and spark additional business investments and job creation."

Rep. Steve Pearce, a Hobbs Republican who like Wilson and Udall is running for Domenici's Senate seat, told the Truth or Consequences Herald that "families need to pay their bills now and businesses need an alternative to letting workers go, so it is imperative we get a stimulus into the hands of people who will use it quickly. We have an opportunity to do that through tax deductions, credits and rebates, but it must be large, broad-based and immediate."

Pearce spokesman Brian Phillips said the congressman believes tax rebates are a better option than increasing unemployment benefits since the point of the stimulus is to prevent an increase in the number of unemployed in the first place.

Pearce and Domenici both favor extensions of Bush's 2001 tax cuts, which expire in 2010, although Domenici said they might not be part of the stimulus package. Udall said he opposes that extension because those cuts favor the top 2 percent of earners.