Senate OKs Tax Break For New Car Buyers

WASHINGTON (AP) -- 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 approaching $900 billion.

The 71-26 vote came as President Barack Obama said he lies awake nights worrying about the economy, and signaled opposition to congressional attempts to insert "buy American" provisions into the legislation for fear it would spark a 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.

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."

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.

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.

Associated Press writer Andrew Taylor contributed to this report.

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Obama's Economic Concern is BS 2/4/2009 12:16:00 PM Barack Obama's comment that, "...he lies awake nights worrying about the economy..." is disingenuous. If he was concerned about the economy he wouldn't be using fear tactics to goat the American Sheeple into accepting a pork-filled payback Bill that rewards his supporters by funding every leftist pet project they've dreamed of for the last ~40 years.
Tax Brake 2/4/2009 1:03:00 PM We bought a new vehicle six months ago where is our tax brake?
Financial warfare 2/4/2009 1:31:00 PM Great, we'll be handing our money to Tokyo. How are we going to cap salaries of the executives of foreign companies who'll benefit from this?
Obama was told economy would recover on it own 2/4/2009 2:08:00 PM His council of Economic advisers told him that the recession would end in the spring and the economy would recover by summertime. No stimulus bill in history has done anything to recover from a recession because they're always too much pork too late.
rank-and-file lawmakers 2/4/2009 2:49:00 PM i think i spotted a typo up there; should that not be "rank-and-filth lawmakers" ?
Washington 2/4/2009 2:56:00 PM Since when do the idiots in Washington know how to do ANYTHING right? All they do is TAX and SPEND. That's all they know how to do. We NEED NEW leadership. Leaders that put the working people ahead of themselves. (pinch me I'm dreaming) We are all sick of the likes of Pelosi, Reid, Frank, Dodd, Dashel, Kennedy, McCain and all the other career political hacks. Who's getting rich? They are, that's who. Who getting screwed? We are, That's who. People wake up, put term limits up for vote. 4 years is enough for anyone. We need to rid ourselves of these worthless leaches. I bet these jerks aren't cutting back. Heck Dashel can even afford a car and driver from all HIS ill gotten gain. The US government is a disgrace! Change we can believe in. Ya sure, it should be "Change that will make us all POOR"!
Tax deduction? 2/4/2009 3:08:00 PM How about an investment tax credit instead. Oregon has no sales tax and the interest rates are so trivial a writoff as proposed is worth virtually nothing. And I think it should be for cars with 80% or more in US made parts. This would include many Toyotas. Why make citizens buy from the formerly big 2.
Tax breaks for car buyers 2/4/2009 3:22:00 PM Representative Mike Rogers put forth a tax break proposal that makes a whole lot more sense and would probably get more people buying cars. However, he is a Republican, which means his proposal will probably never see the light of day.
Do these people have the slightest clue???? 2/4/2009 3:23:00 PM 1. If these bribe-taking braindead elected officials want to stimulate the car industry instead of giving the automakers money they should give a $10,000 government rebate on a new car purchase (but no price increase). This would cause the car companies to produce cars and provide employment. 2. the automakers should tell the congress to stick their cafe-laws where the sun don't shine and build cars they can sell to the American public. No one in their right mind wants a 'green' $50,000 car. I'd like a 250 hp vette that goes from zero to the moon in 30 seconds and damn the gas mileage. 3. No way would a $1500 tax break encourage me to put out $25000 for a new car. The tax alone is $1250 in Iowa and interest alone would be $1250 the first year. *Just my opinion. Others may differ.
"Obama's economic Concern is BS" 2/4/2009 3:45:00 PM Well dear poster, you pretend to be an Obama mind reader - better it is to look at what he proposes, true there is a lot of tax-cut BS in his package, which is thought to cover the republican fat-cats for the sake of the BS bi-partisan support mantra. But the funding of programs for those fellow citizens which have suffered more and more through the giantic W misadminstration BS, can hardly be denounced as leftist - only if you refer to uninsured folks/kids as leftist, un-employed workers as leftist, or just all those folks who have not enjoyed the billion $ bonus pay-outs from Wallstreet screw-up millionaires that enjoy tax-payer funded benefits. before calling anything stupidly 'leftist' look at this country and the devastation the W-crew has LEFT - call that "LEFTIST" and a lot of people will agree with you. The fear tactics you wrongly tag to Obama is nothing which can compete with the fear mongering through the W crew during the last 8 years with their BS tactics on the so-called 'war on terror' which really was nothing more then an bid sceem to enrich their corporate buddies!
automonbile taxbreak 2/4/2009 3:59:00 PM Won't work for me, there are still plenty of low mileage late model "good clean" used cars on the lots everywhere I look. I been buying these beauties for years, they are just as good as new and I don't have to spend much every month. Keeps more money in my wallet, where it should be, in the 1st place.
So far... 2/4/2009 4:15:00 PM ...the "stimulus" has been little more than a gift to the same greedy bankers who helped dig the hole we're all in. While tax breaks to buy cars may be helpful if you can't get a loan or don't have a job this isn't going to help.
(2) "Obama's economic Concern is BS" 2/4/2009 4:29:00 PM Dude, slow done and try off the "chronic" next time. You are rambling way to much. It seems like you want to blame someone else for what? Individual and non-coincidental failings of a diverse grouping? And for the record, the package Obomba's selling looks alot like Pigs idea of Heaven...
obama's economic concern IS bs 2/4/2009 4:34:00 PM [Obama's economic Concern is BS" Well dear poster, you pretend to be an Obama mind reader] dear responder, the original post had no mind reading but stated facts as seen by him. The past 20 years has been: Bush, Clinton, Bush and now the next 4 years we are returning to Clinton. I am also offended by calling obama 'left' as he is obviously a 'socialist'. Seems that everyone with an ambition to work (or be elected) gained over the past Reagan-boom whether they were republican fat-cats, democrat fat-cats or independent fat-cats. But the tide is turning and with the new schip boondoggle now we will have much much weller kids, richer doctors, bigger government and poorer taxpayers. I do fear obama's ability to take everything I have saved and everything I earn to be re-distributed. I hope for your happiness that the fat-cat Nutzy Pelosi takes everything from those rich corporate buddies and gives it to the poor crack-addicts that voted day and night over and over agan to get obama elected. In fact, My life has become so much better beginning tonight because obama is putting a capped maximum wage on those rich bloated CEO's and COO's and Cxx's (I'm sure he meant "republican rich bloated" because everyone knows the super-rich democrats are working hard for the lower class individuals). Ohhhh, now they won't be able to hop in their jets and play golf with the $200 bottles of scotch at their favorite country club. Life for everyone on the face of the earth has suddenly become better. What's next? A price cap on those greedy degreed engineers? Or those fat-cat waitresses because everyone knows they don't deserve that bloated $5 tip either....
Obama...concern..bs 2/4/2009 4:38:00 PM Let's not make this soley a politcal argument. If the leftist policies will work it wil require Obama appontees that are patriotic and actually PAY their own taxes. Not tongue waggers that say the nasty, big coprorations need to be brought down and pay more taxes, as well as all wealthy Ameicans Like themselves) so that there is plenty of $$$ for a socialist leaning gov't to give to citizens that do not constructively offer to this great nation!
"Financial Warfare" 2/4/2009 4:39:00 PM The heads of the Japanese automakers have already taken pay cuts in 2009. Can't say the same for the American auto chiefs - or the auto workers union.
smaller, more general, that incentivizes desirable things 2/4/2009 11:54:00 PM This plan, in addition to the large loans to companies, seem disjointed and likely there's much more to be understood. It sounds like a good idea to A) put a price point on gas (and other fossil fuels...) so that it incrementally (over say 5 years) gets to a stable price ($5 to $10 / gal) and the proceeds are used in targeted incentives toward better energy (efficiency, sources, public transit) that smooths the transition to better methods. B) If there is an auto stimulus, limit it to the types of cars one wants to support (maybe inverse proportional to gas mileage, etc.) C) More oversight on corporate funding. Banks to be more transparent, have closer scrutiny on ratings, and for auto companies the same, and particulars to commit to efficiency, or maybe to have the oil companies bail out the auto companies. Ideally I would like to see (incremental) incentives available to companies that meet criteria (like gas mileage, criteria for transparency, etc.) instead of bail-out money targeted at bad companies... Apparently a concern is the speed at which the funding needs to be applied to prevent shut-downs, but that sounds more like a matter of all-around mis-management that should have been clear after the savings and loans... My larger concern is that the (short-sighted, knee-jerk, point-solution) fixes come at the expense of solutions...
Actually......... 2/5/2009 7:38:00 AM GM CEO is working for $1. That's a pretty good paycut if you ask me. I agree - this is ill-structured. I bought a new car 9/2008. I am not interested in giving my tax dollars to fund a break for my neighbor to now go out and buy a new car under new rules. They'd be better off to just say that henceforth, interest paid is deductible. Does not matter what you bought or when you bought it. This would stimulate consumer spending of all sorts. Once upon a time interest WAS deductible.
"$5 to $10 a gallon"??????? 2/5/2009 9:12:00 AM Nothing like bringing the American economy to a grinding halt. I see a day when my employer has to send my entire paycheck to the US government and I'll have to fill out forms on a weekly basis to (beg) justify my expences. That system works pretty well in Russia, don't you think? Might just be easier to go on welfare and watch Opra and eat bon-bons.
New Automobile Tax Breaks 2/5/2009 9:51:00 AM Yes, I am all for incentives to buy American Cars. Dealers should also give Big Rebates.
Tax breaks and bailouts. 2/5/2009 1:18:00 PM Obama's plan should be to appoint eveyone in Congress, Senate and the House of Reps to a cabinet post. Once they get investigated and find they haven't paid taxes (like the latest $146000 deadbeat) we could quit arguing about the politics, finger pointing, bailouts and tax breaks and hopefully work on getting the train back on track.
Big 3 Cars Only? 2/6/2009 10:44:00 AM Did I miss something, 'cause I didn't see any requirement that the car be a GM, Ford or Chrysler product? Isn't that whom we should be helping?! The point is to keep a "domestic", i.e. US-owned, automobile manufacturing base viable, while they (hopefully) transition into the next generation vehicle, e.g. Volt, etc. This is pointless if it can be used to purchase Toyotas and Volvos, (yes, I know that alot of foreign car companies build cars here. That's nice and well and good, but it does not equate to a viable US-owned industry, and yes, it is important that it be US-owned, not enough space here to explain why. Figure it out...).
Sinators 2/6/2009 11:57:00 AM Yeah, that's probably why BHO wants to close GITMO so soon, since most of our home grown terrorists, Sinators and House of Non-Representatives, belong down there with the rest of the foreign terrorists.
Just Wondering... 2/6/2009 5:24:00 PM Which of the posters here has actually SEEN and/or READ the proposed stimulus proposal?? And which one was actually on the Presidential ticket in November. None of you sound like McCain... I just wonder how you all know so much about what's been agreed to and what's being debated. I haven't seen any "Official" documents published. Ya'll can't tell me you're actually listening to the "unbiased" mainstream Media... can you?
Value add content of vehicles 2/7/2009 12:15:00 PM Japanese vehicles made in the US have a larger U.S. content than most all “American” car company’s vehicles. GM may do final assembly in the U.S., but systems such as dashboards, lights, brakes, seats, steering, as well as major components which go into an auto are made in Mexico. (I’ve often said that Mexico should be helping to bail out GM). Due to the LEAN manufacturing system employed by Toyota, suppliers and sub assemblers must be within a 100 mile radius of the assembly plant. This gives Toyota a 90% U.S. content, compared to GM’s 40% content on an “American” vehicle. If you really want to help the American worker, buy Japanese.
Response to "Lies Awake At Night is BS" 2/9/2009 12:27:00 PM You don't even have a clue do you? Given the mess that this President has inherited, and the fact that he was selected to turn it around, he's lays awake at night. Because if he and his team don't nitwits like you and the rest of us are in trouble, and guess who is going to be blamed, the person who says that he "stays awake at night".
Economy 2/9/2009 4:04:00 PM Send us taxpayers money, then we can pay our mortgages and the bank will be making money and our homes will be paid for, then we can spend money on other things and stimulate the economy.
ReBumlicans 2/10/2009 4:43:00 PM Nothing like reading the whining of all the loser Republicans. Did everyone forget that when "W" took office, unemployment was around 2%, Oil was around $20/barrel, the main discussion was whether to 'retire' the national debt (with the surplus) - oh, and the US was at peace. 8 years of the American Sheeple (nice one from above) being spoon fed policy from Rush Limbaugh and Dick Cheney has made today seem like we're living in a parallel universe.
Tax Break to Company's who builds plants overseas 7/3/2009 1:42:00 PM We need to build the manufacturing base back in America - We have given US company's money (tax breaks) even when they build capacity overseas. Stop this now the only people who realy benifit from this are top executives and the other countries. buy American!! Everytime you walk into Walmart. Say I would have bought something but it was made in China. Let's force industry to bring back manufacturing to America!!!
Re:ReBumlicans 7/3/2009 2:54:00 PM Actually the unemployment rate hovered around 5% during the G.W. Bush administration. The closest the unemployment rate came to 2% was back in 1953 during the Eisenhower administration, and that was at 2.9%. The policies put in place by Reagan and maintained by George H.W. Bush are what brought the unemployment rate down from a high of 9.7% (1982) down to a low of just under 4% (2000). Clinton was able to enjoy the results from his predecessor's work during his time as president. Unfortunately, the policies of the Clinton administration and a Democrat-controlled Congress reversed the downward trend and jacked the unemployment rate up to the (about) 5% seen during G.W. Bush administration. Obama promised that with passage of the 'Stimulus' bill, unemployment would not exceed 8%. We see his promise was not met as the unemployment rate has hit 9.5% and is continuing to climb. Peace can only be maintained through consistent and diligent work - none of which was illustrated by the Clinton administration. At that time we saw an increase in terroristic attacks against the U.S. and its interests (first attack on the WTC, USS Cole, Kobhar Towers, U.S. Embassy in Africa come to mind). Clinton did nothing to address this issue. His own cabinet recommended that airport security be increased to ward off potential terrorist attacks. Since such matters would likely cause problems with Clinton's self-perceived popularity, he refused. It was shown that Al Qaeda made preparations for the attack of 9/11 during Clinton's administration. So much for maintaining the peace. You neglected to mention that the price of raw crude oil skyrocketed to $148/barrel just after the Democrats took control of Congress during the final two years of G.W. Bush's administration. During the time of Jimmy Carter, the United States produced 2/3 of its oil. It was at that time that a moratorium on domestic drilling was put in place by the Democrats - after all, we want to keep our nation clean and thus use oil from foreign suppliers. Thanks to that policy we now import 2/3 of our oil and that rate is continuing to climb in spite of the fact that we have many sources here on our own soil. Welcome to YOUR parallel universe!
Handing our money to Tokyo...!?! 7/3/2009 6:27:00 PM To the person who said, "Great, we'll be handing our money to Tokyo. How are we going to cap salaries of the executives of foreign companies who'll benefit from this?" First off, according to the great American Way (which most assume to mean Ayn Rand's unregulated Objectivism), that's EXACTLY the way it should be. You don't like US companies being bailed out? Good! DON'T bail them out! DON'T force people to buy unreliable, undesireable American cars! If Japanese carmakers can figure out how to make cars people want and need at a reasonable price, the CAPITALIST WAY says you should buy THOSE cars, and the companies that cannot provide the needed product should suffer until they figure it out and turn themselves around. And complaining about inflated CEO's salaries of foreign companies??? What a joke! The ratio of AMERICAN CEO's salaries to those of AMERICAN line workers is substantially higher than in Japan. Don't go giving the Japanese hell for problems unique to the UNITED STATES! Or are you one of them socialist.communist types that believes that US car companies should suckle at the Federal teat their whole lives?!?

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