US House, Senate pass hurricane tax bills

By Donna Smith

WASHINGTON (Reuters) – The U.S. Senate and House of
Representatives approved separate tax relief bills for
Hurricane Katrina victims on Thursday and vow to quickly
resolve their differences before sending legislation to
President George W. Bush.

The House also passed a measure to establish a special
committee to jointly investigate with the Senate the sluggish
government response to Katrina. Democrats objected to the
Republican-led panel, saying a fully independent outside
commission was needed to get to the truth.

“The Bush administration and the Republican Congress should
not investigate themselves,” House Democratic Leader Nancy
Pelosi said. “And partisanship has no place in this inquiry.”

Despite the partisan bickering over how to proceed with an
investigation into the botched government response, lawmakers
worked cooperatively to pass the tax bills, the first of a
series of measures expected to help Katrina victims.

The Senate and House tax bills give a tax break to people
providing housing to storm victims and allow victims to make
penalty-free withdrawals from retirement savings accounts.

“This can’t come fast enough,” said Senate Finance
Committee Chairman Charles Grassley, an Iowa Republican. “We
need to get these tax incentives on the books to help people
make a fresh start.”

The bills also ensure families do not lose child credits
and other tax benefits due to income lost because of the storm.
The Senate bill, with an estimated cost of $7 billion over five
years, gives more generous tax breaks to employers who hire
storm victims and who keep people on the payroll despite a loss
of business. The House bill costs an estimated $5 billion.

The tax bill is the first in a series of storm-related
legislation Congress is rushing to pass to help the hurricane’s
victims and hasten reconstruction in Louisiana, Alabama and
Mississippi.

EXTENDED BENEFITS

The Senate is expected to soon take up legislation that
would temporarily expand the federal government’s role in the
Medicaid health care program for the poor by paying 100 percent
of the costs for Katrina victims. Normally the cost is split
between states and the federal government.

That bill will also add an extra 13 weeks of unemployment
benefits for Katrina victims and waive some welfare rules to
make it easier for both states and beneficiaries to access
funds. The House has already taken action on welfare rules.

Meanwhile, the House Government Reform Committee held its
first hearing into the government’s sluggish response to
Katrina, hearing from California, Florida and District of
Columbia officials on how they prepare for disasters.

Democrats are pushing for an independent commission to
investigate the catastrophe, arguing that a Republican-led
Congress might not do a thorough job of investigating a
Republican White House. They complained that none of the
witnesses at Thursday’s hearing had anything to do with the
Katrina response.

But committee Chairman Tom Davis, a Virginia Republican,
said he did not want to interfere with relief efforts and
promised a comprehensive review.