Jan. 29 (Bloomberg) -- The U.S. House approved a $146 billion economic stimulus plan aimed at averting an election- year recession in part by sending tax-rebate checks to about 111 million Americans.

Lawmakers voted 385-35 to approve legislation that would also expand investment tax breaks for business and add capital to the slumping mortgage market by allowing federally chartered companies Fannie Mae and Freddie Mac to buy mortgages above the current federal limit. Republican and Democratic lawmakers said the bill would give a much needed jolt to the sagging economy.

``This is good news for the American public,'' said House Majority Leader Steny Hoyer, a Maryland Democrat. ``This stimulus will put money in the hands of hard-working Americans to give them the help they need and at the same time stimulate the economy.''

House leaders negotiated the stimulus plan with President George W. Bush. The House vote sends the bill to the Senate, where some senators said they would try to alter the House version, potentially delaying passage.

Majority Leader Harry Reid, a Nevada Democrat, wants to complete work on the legislation by the end of the week, said his spokesman Jim Manley.

Distributing Checks

Lawmakers have said they want to get the bill to Bush by Feb. 15 so the government can begin distributing checks before June. Under the House measure, individuals would receive as much as $600 and couples would get up to $1,200. Families would get $300 for each child.

Senate Finance Committee Chairman Max Baucus, a Montana Democrat, yesterday proposed sending smaller checks to more people including millions of senior citizens he said would be left out of the House proposal. He also wants to extend unemployment benefits. The Joint Committee on Taxation said Baucus's bill would cost $161.3 billion, with $119.6 billion going to tax rebates, $10 billion to unemployment and the rest to business tax breaks.

A group of 22 senators, including Democratic presidential candidate Hillary Clinton, released a letter to congressional leaders today urging them to add $5 billion to the stimulus package for transportation-related projects.

House Version

Bush, at the White House, hailed the House action and urged the Senate to vote without delay.

``We need to get this bill out of the Senate and on my desk so the checks can get in the hands of our consumers and our business can be assured of the incentives necessary to make investments,'' Bush said.

At a joint news conference today on Capitol Hill, House Speaker Nancy Pelosi and Republican leader John Boehner urged their Senate counterparts to avoid attaching costly new provisions to the bill that could make it harder to get a compromise plan to Bush's desk.

``I hope the Senate will take heed,'' said Pelosi, a California Democrat. ``I would hope that the Senate would take up our bill and pass it, so that this can be as timely as it needs to be.'' Boehner added: ``The key to this whole exercise in providing these economic growth incentives is to do it now.''

The House plan would distribute checks of $300 to those who earned at least $3,000 last year. Higher earners would earn as much as $600 for individuals, $1,200 for couples and an additional $300 for each child. The benefits would be phased out for individuals who earned more than $75,000 and couples who took home at least $150,000.

Cost the Treasury

The tax-rebate plan would cost the Treasury about $100 billion this year, according to the Joint Committee on Taxation. Lawmakers waived ``paygo'' rules requiring them to offset that expense with savings elsewhere in the budget to avoid adding to the deficit. Hoyer said the move was justified ``when you have a crisis economically,'' though not all his colleagues agreed.

``Short-term economic stimulus shouldn't make our long-term deficit worse,'' said Representative Jim Cooper, one of 10 Democrats to vote against the bill. ``We can't keep on mortgaging our children's future $150 billion at a time. Paygo exists to force Congress to make hard choices, even in election years.''

Baucus has proposed providing $500 for individuals, $1,000 for couples and $300 for each child under 17. The Senate plan would count Social Security benefits as income, making millions of retired Americans eligible for a rebate. The Senate proposal also drops House provisions phasing out benefits for wealthier Americans. Reid criticized that provision, saying it would be a waste of money.

``We should not spend an extra $5 billion so I can get a rebate,'' Reid said. ``Warren Buffett should not receive a rebate.''

The House bill would expand business tax breaks primarily by providing a 50 percent bonus deduction for new equipment. That provision would cost the Treasury about $44 billion, according to the Joint Committee on Taxation.

Depreciation

Baucus's proposal omits the mortgage-limit increases while changing the business tax-break provisions so that companies could take a 25 percent bonus deduction for two years rather than a 50 percent deduction for a single year.

His plan would target unprofitable companies by giving them a tax refund for losses over the past five years rather than the current limit of two years. It also would extend unemployment benefits for an additional 13 weeks with extra aid going to states recording unemployment rates of 6 percent or higher. The Finance Committee will consider Baucus's plan tomorrow.

The House bill is H.R. 5140.

To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net

Last Updated: January 29, 2008 17:38 EST