Senate snag delays US rescue plan

http://news.bbc.co.uk/go/rss/-/1/hi/business/7219559.stm

Version 0 of 1.

A key committee in the US Senate has approved a different version of the economic stimulus plan, setting up a possible showdown with President Bush.

The Senate plan provides additional money to retired people and veterans who were excluded from Mr Bush's plan.

US House of Representatives has approved a $146bn (£73bn) economic stimulus package proposed by the President to fend off a recession.

The Senate plan, worth $157bn, was backed by some key Republican Senators.

Charles Grassley, the senior Republican Senator on the Finance Committee, said that "this is a good package".

And he argued that it had corrected a "flaw" in the House bill which would have allowed illegal immigrants to receive tax rebates.

Senate battle

But Senator Mitch McConnell, the Republican minority leader in the Senate, has vowed to block the Senate Finance Committee proposals and force through the House version.

President Bush has already warned the Senate not to delay the bill which he says is crucial to America's economic well-being

But if the Senate passes a different bill, the deal will have to be renegotiated by a House-Senate joint committee before resubmitted for a vote to both Houses of Congress.

Mr Bush warned Congress in his State of the Union address not to try and change the bill, and could use his power of veto.

Rates slashed

Under the president's proposed package, some 117 million US homes would receive a rebate of up to $600 for individuals and up to $1,200 for married couples.

Couples with children will also get an extra $300 per child.

The tax rebates for households should total $100bn, while businesses will benefit from up to $50bn of tax cuts.

It follows the Federal Reserve's decision to slash US interest rates to 3% from 4.25% over the past two weeks, the most aggressive move for many years.

Economists say the stimulus package needs to be put into action as soon as possible, before it is too late to help the economy.

The latest figures show that the US economic growth fell sharply in the final three months of 2007 to an annualised rate of just 0.6%.

Congressional leaders have vowed to send a bill to the White House by 15 February.