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GM Wins, Loses in Stimulus Pact While Homebuilders Get Less Aid
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Feb. 12 (Bloomberg) -- General Motors Corp. emerged as both a winner and loser in the $789 billion economic stimulus package that lawmakers agreed to after ironing out differences between competing House and Senate versions.
GM won a provision that will erase a tax liability of up to $10 billion that would have resulted from restructuring efforts, said Senator Debbie Stabenow, a Michigan Democrat.
Yet GM, Ford Motor Co. and other automakers failed to get the full tax write-offs for car buyers proposed in the Senate bill, which might have slowed the plunge in sales that has pushed GM to the brink of bankruptcy. Homebuilders such as Centex Corp. didn’t fare as well as they would have under the $838 billion Senate measure adopted earlier this week.
President Barack Obama, who this week has been stumping for the plan in areas hard-hit by the economy, is counting on the package to help revive the economy. The U.S has lost 3.6 million jobs since December 2007, and the nation’s unemployment rate has risen to 7.6 percent, its highest level since 1992.
"This is the biggest stimulus bill ever passed in the history of the country," said Pete Davis, president of Davis Capital Investment Ideas in Washington, which provides analysis of Congress to investors.
Public Works Spending
The effects will be widespread, with individuals getting a boost from tax breaks, state governments seeing additional funding and companies benefiting from road building and other infrastructure projects in the package, Davis said. “The peak of the effects will probably occur in six to 12 months,” he said.
The package, which will be sent to the White House for Obama’s signature after final congressional approval in both chambers, amounts to the biggest burst of public works spending since the interstate highway system was started in the 1950s.
Congressional staffers were still working on the final draft of the legislation last night. The House may vote on the plan as early as today.
A proposed $15,000 tax credit for homebuyers was reduced to $8,000, Democratic Senator Max Baucus said, a decrease that may hurt U.S. homebuilders such as Centex and D.R. Horton Inc.
GM’s tax liability would have been triggered by its plan to offer equity in exchange for debt and for health-care obligations to union workers. GM, surviving with the help of $13.4 billion in pledged government loans, is making the changes in order to meet a U.S. requirement for the aid.
Senate Finance Committee Chairman Baucus said about 35 percent of the stimulus plan consisted of tax cuts and the remainder would be government spending.
Tax Break Eliminated
In a loss for big homebuilders and manufacturers, negotiators all but eliminated the biggest tax cut for businesses, a provision that would let companies convert losses into tax refunds, Baucus said.
Baucus said the measure, which would have let companies claim an estimated $67.5 billion in tax refunds this year and next, was sacrificed to help keep the final package under $800 billion.
The provision had been a top priority of business groups including the National Association of Manufacturers, whose members include Dow Chemical Co. and Conagra Foods Inc., and the U.S. Chamber of Commerce.
The change would have been a boon to homebuilders who enjoyed large profits until 2006 when the housing market began to implode.
Democratic Senator Barbara Mikulski of Maryland said her plan to aid the auto industry by letting car buyers take a tax write-off on their interest payments was reduced to $2 billion from the original $11 billion.
Dealers Lobbied
Car companies had been seeking the larger amount after U.S. auto sales fell 37 percent in January, the worst sales month since 1981.
The National Automobile Dealers Association, a trade group for 20,000 car dealers including Fort Lauderdale, Florida-based AutoNation, the country’s largest publicly traded auto retailer, asked its members to urge House Speaker Nancy Pelosi to support the Senate-passed tax deduction.
“While we’re pleased to see the stimulus includes an element designed to motivate auto consumers, we believe the unprecedented sales climate that all automakers are struggling with calls for as much of an incentive as possible,” said Wade Newton, a spokesman for the Washington-based Alliance of Automobile Manufacturers.
Lawmakers scaled back Obama’s proposed payroll tax credit to $400 for individuals and $800 for families rather than the original proposal of $500 and $1,000, Baucus said. The plan includes an alternative minimum tax cut, he said.
On Obama’s Desk
“This represents the beginning of turning our economy around,” Senator Joseph Lieberman, an independent from Connecticut, said when the agreement was announced.
Obama had said he wanted a bill on his desk by the Feb. 16 Presidents’ Day holiday. He thanked lawmakers yesterday, saying in a statement the move would provide tax relief to families and businesses, while investing in health care, energy and infrastructure.
“We did address” GM’s tax liability, Stabenow told reporters. Conferees made changes so that the liability doesn’t apply to companies restructuring under the Treasury Department’s Troubled Asset Relief Program, she said.
The tax burden “has been eliminated,” Stabenow told reporters.
GM spokesman Greg Martin declined to comment.
House and Senate negotiators also agreed to provide $6.3 billion in grants to expand high-speed Internet access in rural areas, according to a Senate Commerce Committee aide. The lawmakers haven’t made a final decision on whether to include the Senate bill’s broadband tax credits, the aide said.
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Feb. 12 (Bloomberg) -- General Motors Corp. emerged as both a winner and loser in the $789 billion economic stimulus package that lawmakers agreed to after ironing out differences between competing House and Senate versions.
GM won a provision that will erase a tax liability of up to $10 billion that would have resulted from restructuring efforts, said Senator Debbie Stabenow, a Michigan Democrat.
Yet GM, Ford Motor Co. and other automakers failed to get the full tax write-offs for car buyers proposed in the Senate bill, which might have slowed the plunge in sales that has pushed GM to the brink of bankruptcy. Homebuilders such as Centex Corp. didn’t fare as well as they would have under the $838 billion Senate measure adopted earlier this week.
President Barack Obama, who this week has been stumping for the plan in areas hard-hit by the economy, is counting on the package to help revive the economy. The U.S has lost 3.6 million jobs since December 2007, and the nation’s unemployment rate has risen to 7.6 percent, its highest level since 1992.
"This is the biggest stimulus bill ever passed in the history of the country," said Pete Davis, president of Davis Capital Investment Ideas in Washington, which provides analysis of Congress to investors.
Public Works Spending
The effects will be widespread, with individuals getting a boost from tax breaks, state governments seeing additional funding and companies benefiting from road building and other infrastructure projects in the package, Davis said. “The peak of the effects will probably occur in six to 12 months,” he said.
The package, which will be sent to the White House for Obama’s signature after final congressional approval in both chambers, amounts to the biggest burst of public works spending since the interstate highway system was started in the 1950s.
Congressional staffers were still working on the final draft of the legislation last night. The House may vote on the plan as early as today.
A proposed $15,000 tax credit for homebuyers was reduced to $8,000, Democratic Senator Max Baucus said, a decrease that may hurt U.S. homebuilders such as Centex and D.R. Horton Inc.
GM’s tax liability would have been triggered by its plan to offer equity in exchange for debt and for health-care obligations to union workers. GM, surviving with the help of $13.4 billion in pledged government loans, is making the changes in order to meet a U.S. requirement for the aid.
Senate Finance Committee Chairman Baucus said about 35 percent of the stimulus plan consisted of tax cuts and the remainder would be government spending.
Tax Break Eliminated
In a loss for big homebuilders and manufacturers, negotiators all but eliminated the biggest tax cut for businesses, a provision that would let companies convert losses into tax refunds, Baucus said.
Baucus said the measure, which would have let companies claim an estimated $67.5 billion in tax refunds this year and next, was sacrificed to help keep the final package under $800 billion.
The provision had been a top priority of business groups including the National Association of Manufacturers, whose members include Dow Chemical Co. and Conagra Foods Inc., and the U.S. Chamber of Commerce.
The change would have been a boon to homebuilders who enjoyed large profits until 2006 when the housing market began to implode.
Democratic Senator Barbara Mikulski of Maryland said her plan to aid the auto industry by letting car buyers take a tax write-off on their interest payments was reduced to $2 billion from the original $11 billion.
Dealers Lobbied
Car companies had been seeking the larger amount after U.S. auto sales fell 37 percent in January, the worst sales month since 1981.
The National Automobile Dealers Association, a trade group for 20,000 car dealers including Fort Lauderdale, Florida-based AutoNation, the country’s largest publicly traded auto retailer, asked its members to urge House Speaker Nancy Pelosi to support the Senate-passed tax deduction.
“While we’re pleased to see the stimulus includes an element designed to motivate auto consumers, we believe the unprecedented sales climate that all automakers are struggling with calls for as much of an incentive as possible,” said Wade Newton, a spokesman for the Washington-based Alliance of Automobile Manufacturers.
Lawmakers scaled back Obama’s proposed payroll tax credit to $400 for individuals and $800 for families rather than the original proposal of $500 and $1,000, Baucus said. The plan includes an alternative minimum tax cut, he said.
On Obama’s Desk
“This represents the beginning of turning our economy around,” Senator Joseph Lieberman, an independent from Connecticut, said when the agreement was announced.
Obama had said he wanted a bill on his desk by the Feb. 16 Presidents’ Day holiday. He thanked lawmakers yesterday, saying in a statement the move would provide tax relief to families and businesses, while investing in health care, energy and infrastructure.
“We did address” GM’s tax liability, Stabenow told reporters. Conferees made changes so that the liability doesn’t apply to companies restructuring under the Treasury Department’s Troubled Asset Relief Program, she said.
The tax burden “has been eliminated,” Stabenow told reporters.
GM spokesman Greg Martin declined to comment.
House and Senate negotiators also agreed to provide $6.3 billion in grants to expand high-speed Internet access in rural areas, according to a Senate Commerce Committee aide. The lawmakers haven’t made a final decision on whether to include the Senate bill’s broadband tax credits, the aide said.
