Senate OKs tax breaks for new car buyers

[Oracle of Delphi]

WASHINGTON - The Senate voted Tuesday 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 edging above $900 billion.

The 71-26 vote came as President Barack Obama said he lies awake nights worrying about the economy and signaled he'll try to knock out "buy American" provisions in the legislation to avoid a possible trade war.

Sen. Barbara Mikulski led the successful effort to allow many car buyers to claim an income tax deduction for sales taxes paid on new autos and interest payments on car loans.

She said the plan would aid the beleaguered automobile industry as well as create jobs at a time the economy is losing them at a rapid rate. "I believe we can help by getting the consumer into the showroom," she said.

Bill making its way through Congress

The provision was attached to the economic stimulus bill at the heart of Obama's economic recovery plan and is subject to change or even elimination as the measure makes its way toward final passage.

Democratic leaders have pledged to have the bill ready for his signature by mid-month, and in a round of network television interviews, the president underscored the urgency. He told CNN that even three months ago, most economists would not have predicted the economy was "in as bad of a situation as we are in right now."

He also spoke out against efforts to require the use of domestic steel in construction projects envisioned in the bill, telling Fox News, "we can't send a protectionist message."

The stimulus bill remains a work in progress, following last week's party-line vote in the House and an Oval Office meeting on Monday in which Obama and Democratic leaders discussed ways to reach across party lines.

In a series of skirmishes during the day, the Senate turned back a proposal to add $25 billion for public works projects and voted to remove a tax break for movie producers. Both moves were engineered by Republicans who are critical of the bill's size and voice skepticism of its ability to create jobs.

But several hours later, without explanation, GOP conservatives abruptly dropped their opposition to a $6.5 billion increase in research funding for the politically popular National Institutes of Health.

Even so, 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 Sen. Dick Durbin of Illinois, the second-ranking Democratic leader, adding that rank-and-file lawmakers in both parties want the bill's cost reduced.

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

More companies announcing layoffs

The developments unfolded as more companies announced job layoffs — including 5,800 at PNC Financial Services Group. In another sign of economic weakness, the Federal Deposit Insurance Corporation predicted the cost of bank failures will exceed its estimate from last fall and urged lawmakers to more than triple the agency's line of credit with the Treasury Department to $100 billion from the current $30 billion.

Mikulski's office put the cost of the tax break she sponsored at $11 billion over 10 years. It would apply to the first $49,500 in the price of a new car purchased between last Nov. 12 and Dec. 31, 2009. Individuals with incomes of up to $125,000 and couples earnings as much as $250,000 could qualify, including those who do not itemize their deductions. A couple would save an estimated $1,553 on a new $25,000 car, aides said.

Sen. Charles Grassley, R-Iowa, sought unsuccessfully to derail the proposal, saying it would only increase consumer debt in a time of recession and adding that there were other provisions in the legislation to help the auto industry. But the 71 votes in support were far more than the 60 needed for passage.

Earlier, the vote to add $25 billion for new construction on highways, mass transit and water treatment facilities failed 58-38, two short of the 60-vote majority needed for passage.

GOP to seek vote later this week

Sens. Dianne Feinstein, D-Calif., and Patty Murray, D-Wash., argued the increase would quickly translate into jobs.

"Our highways are jammed. People go to work in gridlock," Feinstein said in arguing for the proposal.

But Sen. Jim Inhofe, R-Okla., countered, "We can't add to the size of this bill. ... The amount is just inconceivable to most people."

Sen. Tom Coburn led the successful effort to remove a provision allowing movie makers to write off their expenses more quickly. The vote was 52-45, despite protests from Sen. Max Baucus, D-Mont. He said Hollywood was the only industry denied the break in a tax bill two years ago.

Republicans are expected to seek a vote later in the week on a plan to inject the government into the mortgage industry in an attempt to drive down the cost of mortgages to as low as 4 percent. Democrats treaded carefully on the proposal, saying they would consider it but also claiming the $300 billion Republicans allocated would not come close to accommodating the demand.

Link: http://www.msnbc.msn.com/id/28963701/

Edited February 4, 2009 by Pontiac Custom-S

[gm4life]

It should be for cars from the BIG THREE ONLY.

[Drew Dowdell]

The money should be spent on public transit infrastructure instead. Create millions of jobs creating the greatest rail and light rail network in the world. It would put us in a better position economically and would also address total oil consumption by the U.S.

[Croc]

Stupid, stupid...

[Intrepidation]

The money should be spent on public transit infrastructure instead. Create millions of jobs creating the greatest rail and light rail network in the world. It would put us in a better position economically and would also address total oil consumption by the U.S.

+1

[Z-06]

There is always vacuum on top.

[Oracle of Delphi]

I would rather ride an elephant in a tiger infested jungle, than ride Public Transportation. Where are my antibacterial wipes ... :AH-HA_wink:

No offense Lord Ganesh ...

[daves87rs]

Stupid, stupid...

Yep.

This should be interesting....

[Z-06]

I would rather ride an elephant in a tiger infested jungle, than ride Public Transportation. Where are my antibacterial wipes ... :AH-HA_wink:

No offense Lord Ganesh ...

Lord Ganesh is too above mere mortals like you to take any offense and forgives you for your imbecility.

[Drew Dowdell]

I would rather ride an elephant in a tiger infested jungle, than ride Public Transportation. Where are my antibacterial wipes ... :AH-HA_wink:

No offense Lord Ganesh ...

WE wouldn't build it for you.

Think of how much less traffic would be on the roads if the "others" weren't driving.

[GXT]

The money should be spent on public transit infrastructure instead. Create millions of jobs creating the greatest rail and light rail network in the world. It would put us in a better position economically and would also address total oil consumption by the U.S.

I agree. Another plus is that we would be investing for future generations rather than stealing from them to buy vehicles we don't really need.

[Teh Ricer Civic!]

Tax breaks for new cars and homes makes sense if you are trying to stabilize the markets without interfering in them directly... but what would REALLY be beneficial is if they let people write off interest they paid on their auto loans.

Edited February 15, 2009 by Teh Ricer Civic!

[Drew Dowdell]

Tax breaks for new cars and homes makes sense if you are trying to stabilize the markets without interfering in them directly... but what would REALLY be beneficial is if they let people write off interest they paid on their auto loans.

That ignores the biggest part of the problem. People can't get credit in the first place and many don't want additional credit due to unstable employment situations.

One can't write off something one is not paying for anyway.

[Teh Ricer Civic!]

That ignores the biggest part of the problem. People can't get credit in the first place and many don't want additional credit due to unstable employment situations.

One can't write off something one is not paying for anyway.

Then what do you propose? Following Japan's recipe for a decade of blahness?