President George W. Bush signed a US$51 billion economic stimulus package that extends benefits to unemployed workers and provides tax breaks to businesses, ending six months of political stalemate.
The president, flanked by congressional leaders at the Rose Garden bill-signing ceremony, said the legislation gives "short-term help to workers who have lost their jobs" and "long-term stimulus to create more jobs."
PHOTO: AFP
The signing ends six months of debate about proposals to stimulate business investment and restart an economy stalled by recession and the Sept. 11 attacks. It becomes law after a week of positive economic news, including the announcement Friday that the unemployment rate fell and testimony by Federal Reserve Chairman Alan Greenspan that a recovery is "well under way."
"We're seeing some encouraging signs in the economy, but we can't stand by and simply hope for continued recovery," Bush said, one day after the Senate approved the measure 85-9. The House passed the bill Thursday by 417-3. "We must make sure that our recovery continues and gains momentum.'' The measure is less than Bush sought and about half the cost of legislation that House Republicans passed three times, only to die in the Senate. Businesses benefiting from the stimulus package include Citigroup Inc, McDonald's Corp, Intel Corp and the world's largest windmill maker, Vestas Wind Systems A/S.
A political dynamic driving the bill's passage was the expiration of unemployment insurance benefits for workers who lost their jobs since the Sept. 11 attacks. Senate Majority Leader Tom Daschle, a South Dakota Democrat, said the maximum 26 weeks of benefits would have expired for 1.6 million jobless workers by Monday, the six-month anniversary of the Sept. 11 attacks.
"The terrorist attacks of Sept. 11 were also an attack on our economy, and a lot of people lost their jobs," the president said. "Since then, many laid-off workers have been relying on unemployment benefits, which normally end after 26 weeks."
Extending benefits for any extra 13 weeks "will allow those who lost their jobs in the recession or in the aftermath of the Sept. 11 attacks more time to pay their bills and support their families while they look for work," he said.
Daschle, Vice President Dick Cheney, House Speaker Dennis Hastert, an Illinois Republican, and Senate Minority Leader Trent Lott, a Mississippi Republican, attended the Rose Garden ceremony.
In addition to the extension of tax incentives and unemployment benefits, the legislation includes US$5 billion in tax breaks over 10 years to rebuild the area of New York City damaged by the terrorist attacks. Some of that money will support US$8 billion in tax-exempt "Liberty Bonds." The measure also supports the city's effort to use US$9 billion for advance refunding of tax-exempt bonds.
"The people of New York have shown great courage and perseverance, and America stands with them," the president said.
Provisions sought by business included a five-year extension of the so-called Subpart F tax break for overseas income of insurance companies and banks, sought by Citigroup, American International Group Inc. and other financial-services companies with foreign operations. The measure is projected to cost the Treasury US$9 billion over 10 years.
Restaurants such as McDonald's, hotels and others in the hospitality industry benefit from a two-year extension of tax credits for hiring people from welfare rolls.
A provision Democrats sought that allows faster depreciation for new plants and equipment is also in the new law.
"In order for people to find jobs, businesses need to be hiring," Bush said. "So this new bill will provide tax incentives for companies to expand and create jobs by investing in plant and equipment."
The bill allows businesses to carry back net operating losses for five years and write off 30 percent of new investments in plants and equipment over three years. The provision was sought by computer-related companies such as International Business Machines Corp and Intel Corp, which hope it will boost sales of their equipment and software.
The bill began its journey a week after the Sept. 11 terrorist attacks as House and Senate leaders met with Greenspan and former Treasury Secretary Robert Rubin, now chairman of Citigroup's executive committee.
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