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Economy pact by House leaders, Bush could mean tax rebate checks by May Senate OK needed

WASHINGTON -- If you get a pay envelope, Uncle Sam's about to put a little something extra in it. And he wants you to go out and spend, spend, spend.

WASHINGTON -- If you get a pay envelope, Uncle Sam's about to put a little something extra in it. And he wants you to go out and spend, spend, spend.

Starting around May, most taxpayers can expect a $600-$1,200 rebate from the federal government under a deal announced Thursday by congressional leaders and President Bush.

The deal came together with unprecedented speed as Congress and the White House moved to begin rushing the tax rebates to most tax filers by spring, hoping they will spend the money just as quickly and jolt the ailing economy to life.

Rebates would be even higher for families with children.

The one-time tax rebates are at the center of a hard-won agreement to pump about $150 billion into the economy this year and perhaps stave off the first recession since 2001. House Speaker Nancy Pelosi, Republican leader John Boehner and Treasury Secretary Henry Paulson worked out the details in negotiations that stretched into Wednesday night at the Capitol.

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Approval by the Senate is needed, too, but pressure is strong for quick action by all concerned.

About two-thirds of the tax relief would go out in rebate checks to 117 million families beginning in May. Businesses would get $50 billion in incentives to invest in new plants and equipment.

Individual taxpayers would get up to $600 in rebates, working couples $1,200 and those with children an additional $300 per child under the agreement. In a key concession to Democrats, 35 million families who make at least $3,000 but don't pay taxes would get $300 rebates.

The rebates would phase out gradually for individuals whose adjusted gross income exceeds $75,000 and for couples with incomes above $150,000. Contributions to IRA and 401(k) retirement accounts and health savings accounts would not count toward the income limit.

"This package will lead to higher consumer spending and increased business investment," Bush said in hailing the agreement.

To address the mortgage crisis, the package raises the limit on Federal Housing Administration loans from $362,790 to as high as $729,750 in expensive areas, allowing more subprime mortgage holders to refinance into federally insured loans. To widen the availability of mortgages across the country, it also provides a one-year boost to the cap on loans that Fannie Mae and Freddie Mac can buy, from $417,000 up to $729,750 in high-cost markets.

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