• An NASE Insider Look: Economic Stimulus Package Debate

An NASE Insider Look: Economic Stimulus Package Debate

The National Association for the Self-Employed has been working overtime to ensure your views are represented in the formulation of an economic stimulus package. NASE President Robert Hughes recently presented testimony before the House Small Business Committee regarding much-needed changes to depreciation schedules and increased expensing limits under Section 179.

The good news is that Congress listened. Following Hughes’ testimony, the House drafted H.R. 3090, which includes an increase in Section 179 expensing limits to $35,000 and provides an immediate 30-percent depreciation deduction for qualified equipment purchased after September 10, 2001 and before September 11, 2003.

However, there is still much work to be done, and the debate in Congress continues. The NASE is committed to making your concerns known throughout the entire process. The NASE believes that a strong American economy is dependent upon the success of small businesses. With this thought in mind, the NASE will continue to take an active role in the creation of an economic stimulus package. 

A brief recap of events follows to thoroughly explain the process and the issues regarding the creation of the stimulus package – a critical piece of legislation for small-business owners.

Recap of Events

On October 5, President Bush expressed his support for quick passage of a stimulus package “equal to or a little bit greater” than the $60 billion dollars already appropriated to disaster relief efforts. He also clearly outlined desired tax relief and economic stimulus provisions including:

• Acceleration of the marginal tax cuts passed earlier this year
• Targeted tax relief for low and moderate income workers
• Enhancement of expensing provisions for businesses

On October 24, the House passed H.R. 3090, The Economic Stimulus and Recovery Act of 2001. The $99.5 billion package was Republican-written and focused on tax cuts, although it includes payments to low-income workers and expanded benefits for the unemployed. The bill was approved along party lines by a vote of 216 to 214.

Unfortunately, the introduction of the Senate version of an economic stimulus package was delayed. On November 8 by a party line vote of 11-10, the Senate Finance Committee approved a $66.4 million dollar stimulus plan written by Finance Committee Chairman Max Baucus of Montana. The Democrat-written legislation also includes the same Section 179 expensing provision as the House version and a scaled down version of the depreciation provisions to 10 percent. 

Current Status of Package

Currently the outlook for a completed stimulus package looks grim. The Senate recently began debating its version of the bill and hopes to vote on it this week. Due to partisan politics, however, the Senate has become deadlocked along party lines. The Senate has 50 Democrats, 49 Republicans and one Independent. These dynamics may cause the Republicans to invoke a procedure requiring Democrats to get a minimum of 60 votes to pass the legislation. With such a slight majority, it is unlikely the Democrats will get the votes needed.

Congressional leaders and the White House had tentatively decided to negotiate on the stimulus plan. The proposed talks would have allowed House and Senate negotiations to proceed before the Senate passed a stimulus bill. Senate Minority Leader Trent Lott of Mississippi said Tuesday afternoon, "It’s time that we negotiate a bipartisan package, one that can be accepted in the House and the Senate, probably overwhelmingly, and go to the president for his signature sooner than later." However, House Republican leaders decided not to negotiate, insisting that the Senate must pass its stimulus package before negotiations can begin.

Conclusion

If the Senate is able to pass its economic stimulus package, negotiations between the House and Senate bill will follow. Both the House and Senate will have to make significant concessions to reach an agreement. Another pressure Congress will face is time constraints. The target date of adjournment for Congress was scheduled to be early October. However, with  pressure from the Bush Administration to get a bipartisan stimulus plan completed before the end of this year, Congress could be in session until the December holidays.

Regardless of the timetable for the economic stimulus plan, the NASE will continue to be an advocate for the nation’s self-employed and the small-business community. The NASE also encourages you to become involved by writing your elected officials to support a bipartisan economic stimulus package that will include provisions to assist the self-employed. To make this task easier, the NASE has composed a pre-written letter on the subject that can be found in the Legislative Action Center.