Senate OKs tax break for new-car buyers

Estimated $1,553 savings on $25K auto; But stimulus price tag soars

Senator Barbara Mikulski, a Maryland Democrat, led the effort to help the beleaguered auto industry. Senator Barbara Mikulski, a Maryland Democrat, led the effort to help the beleaguered auto industry.
Associated Press And Globe Staff / February 4, 2009
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WASHINGTON - The Senate voted yesterday to give a tax break to new-car buyers, setting aside bipartisan concerns over the size of an economic stimulus bill with a price tag approaching $900 billion.

The 71-to-26 vote to add the tax break came as President Obama signaled opposition to congressional attempts to insert "buy American" provisions into the legislation, saying in one of a series of television interviews that "we can't send a protectionist message."

Senator Barbara Mikulski, a Maryland Democrat, led the successful effort to help the beleaguered auto industry by allowing many car buyers to claim an income tax deduction for sales taxes paid on new autos and interest payments on car loans. "I believe we can help by getting the consumer into the showroom," she said. A couple would save an estimated $1,553 on a new $25,000 car, aides said.

Senate Republicans pushed through an amendment to remove a tax break for movie producers and blocked Democrats from adding $25 billion for highways, mass transit, and water projects to the package, insisting that additional infrastructure projects be paid for with cuts elsewhere in the bill. The Democratic amendment won 58 votes, just shy of the 60 needed under Senate budget rules.

"We can't add to the size of this bill," said Senator Jim Inhofe, an Oklahoma Republican. "The amount is just inconceivable to most people."

The $819 billion plan approved without a single Republican vote in the House last week faces assaults from both Democrats and Republicans during debate this week, as lawmakers aim to kill ideas that won't jolt the economy right away.

"The goal is to shape a package that is more targeted, that would be smaller in size and that would be truly focused on saving or creating jobs and turning the economy around," said Senator Susan Collins, a Maine Republican. She said ideas like $870 million to combat bird flu should be dumped.

Senator John McCain, Obama's presidential rival, urged supporters yesterday through his Country First political action committee to sign an online petition against the package, calling it "big on the giveaways for the special interests and corporate high rollers, yet short on help for ordinary working Americans."

Democratic leaders conceded they may soon be obliged to cut billions of dollars from the measure. "It goes without saying if it's going to pass in the Senate, it has to be bipartisan," said Dick Durbin of Illinois, the second-ranking Democrat in the Senate.

One Democrat, Senator Ben Nelson of Nebraska, said he hoped for reductions "in the tens of billions of dollars."

Obama took his sales pitch to the airwaves, doing interviews in the Oval Office with major broadcast and cable networks. "I think we are closer to getting it right than all of these critics," he said on Fox News Channel.

As part of its hard sell, the White House released job-creation estimates from the economic package. It said that of the 3 million to 4 million jobs the plan would save or create, 800,000 of them would be in 10 Eastern states. The estimates include 83,000 jobs in Massachusetts, 44,000 in Connecticut, 17,000 in New Hampshire, 16,000 in Maine, 13,000 in Rhode Island, and 8,000 in Vermont.

A new Gallup poll released yesterday suggested why the White House is selling the plan anew to the public - the survey shows that the recovery package is far less popular than Obama himself.

According to the poll, 38 percent of Americans want the recovery package passed as is, 37 percent want major changes, and 17 percent want Congress to reject it entirely.

Nineteen Democratic and Republican governors cited frozen credit markets and rising unemployment in urging lawmakers to resolve their differences and asking Obama to sign the bill as soon as it reaches his desk. The governors said the money it provides for public education, healthcare, and rebuilding the nation's infrastructure will create and preserve jobs while making a sound investment in the country's long-term economic interests.

"While we all believe in the importance of free markets, we believe that the markets today need stimulating," the governors told Obama in a letter the White House released yesterday. Among the signers were Democrats Deval Patrick of Massachusetts and Tim Kaine of Virginia, and Republicans Arnold Schwarzenegger of California and Charlie Crist of Florida.

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