Senate likely to revise stimulus package after House approval

House Republicans appeared to be most upset by items to increase the Earned Income Tax Credit program that pays low-income families a certain amount if they work full-time and fall below minimum income levels, and another program granting aid to the states to pay for rising unemployment claims: Republicans would rather the state assistance take the form of a loan.

Two revisions are likely in the Senate: a $70 billion tax cut as part of a plan to fix the alternate minimum tax (AMT). Due to inflation, upper middle income tax payers are being taxed at rates for higher income tax filers. The tax cut is designed to fix it, but it should be noted the change would benefit primarily Republicans, who comprise a disproportionate number of upper-middle-income filers.

Another Senate change: a cut in the corporate profits tax for repatriated earnings. Currently 35%, one plan, which has bipartisan Senate sponsorship, would temporarily slash the rate to 5.25% to encourage corporations to 'return to the U.S.' billions of dollars, which could be used to expand operations and create/save jobs.

Political / Economic Analysis: Senate Democrats may also try to add more infrastructure projects, to get more bang for the stimulus package buck. If passed as is or with the above Senate changes, the stimulus package will help, but most economist agree an additional $400-500 billion in infrastructure stimulus would be needed to move U.S. GDP to the positive territory in the second half of 2009. However, given other Obama administration goals (energy policy reform, health care reform, possible entitlement changes), the administration may be conserving capital -- political and fiscal -- given the large amount of federal spending already scheduled for this year.