Tax Rebates Deal Announced

"I do not understand, and cannot accept, the resistance of President Bush and Republican leaders to including an extension of unemployment benefits for those who are without work through no fault of their own," Rep. Charles B. Rangel, D-N.Y., the Ways and Means Committee chairman, said in a statement.

Sen. Max Baucus, D-Mont., the Finance Committee Chairman, said leaving out the unemployment extension was "a mistake," as he announced plans to craft a separate stimulus package in the Senate starting next week.

Majority Leader Harry Reid said the goal is to send the package to the White House by Feb. 15 for President Bush's signature. Reid said senators would want to look at add-ons including the unemployment extension and possibly money for highway projects.

Bush has supported larger rebates of $800-$1,600, but his plan would have left out 30 million working households who earn paychecks but don't make enough to pay income tax, according to calculations by the Urban Institute-Brookings Institution Tax Policy Center. An additional 19 million households would receive only partial rebates under Bush's initial proposal.

To address the mortgage crisis, the package also raises the limits on Federal Housing Administration loans and home mortgages that Fannie Mae and Freddie Mac can purchase to as high as $725,000 in high-cost areas. Those are considerable boosts over the current FHA limit of $362,000 and the $417,000 cap for Fannie Mae and Freddie Mac's loan purchases.

After a key Wednesday night meeting in which the parameters of an agreement were reached, Pelosi and Boehner spoke again Thursday to cement the accord.

In the talks, Pelosi pressed to make sure tax relief would find its way into the hands of lower-income earners while Boehner pushed to include upper middle-class couples, according to congressional aides.

The package was drawing fire from liberal activists and labor unions upset that proposals to extend unemployment insurance and boost food stamps had been dropped. Many Democratic lawmakers had assumed those proposals would make it into the package, and critics of the deal said those ideas could pump money into the economy more quickly than tax rebate checks that won't be delivered until June.

Democrats wanted to extend unemployment benefits for people whose 26 weeks of benefits have run out, but Republicans resisted.

Conservative Republicans, meanwhile, were likely to be restless over tax rebates going to those without income tax liability.

Democratic aides said greater GOP flexibility over giving relief to poor families with children -- who would not have been eligible under Bush's original tax rebate proposal -- was the catalyst that moved the talks forward.