updated 1/23/2009 4:01:40 PM ET 2009-01-23T21:01:40

Senior citizens receiving Social Security would get a bonus payment of $300 under the Senate version of President Barack Obama’s economic recovery plan.

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The measure includes tax cuts and spending proposals totaling $355 billion under the plan released Friday by Finance Committee Chairman Max Baucus, D-Mont., in anticipation of a panel vote on Tuesday. It will be paired with about $350 billion in further spending proposed by the Appropriations Committee on the Senate floor.

The bonus for seniors is but one chapter in the Senate proposal. There’s also a temporary two-year $500 tax cut for most workers and $1,000 for couples, a $2,500 tax credit to help pay for college, tax cuts for businesses and to promote renewable energy, and $87 billion worth of help to states struggling with their 2009-2010 budgets for the Medicaid health care program for the poor and disabled.

The $300 bonus for seniors and disabled people receiving Supplemental Security Income payments would cost $17 billion, and is perhaps the biggest difference between the House and Senate economic recovery plans. Veterans who get disability and pension payments would also get the $300 under the proposal. The emerging House and Senate plans are generally similar otherwise.

Neither the House nor Senate measure includes help for middle-to upper-income taxpayers caught in the alternative minimum tax, which aimed to prevent tax-avoidance by the extremely wealthy but now threatens more than 20 million tax filers.

Sen. Charles Grassley of Iowa, the Finance Committee’s top Republican, said Friday that he would work to add a provision to the Senate bill to protect those taxpayers from getting a tax increase.

The Social Security bonus is a one-time payment. Other provisions in the stimulus measure generally extend for two years.

The Finance panel also would subsidize for two years almost two-thirds of health insurance premiums for the unemployed retaining health care under the so-called COBRA program. It would extend unemployment benefits for the long-term jobless through the end of 2009, increase the weekly benefit by $25 and provide unemployment benefits to more part-time workers. Up to $2,400 in unemployment benefits would be tax free.

The Senate plan would also provide a $7,500 tax credit for middle-income, first-time home buyers who purchase homes in the first half of 2009.

For low-income workers, the measure would make the child tax credit more generous by making more people eligible for refunds if they earn too little to pay income tax. The earned income tax credit for the working poor would be made more generous for larger families.

President Obama wants the bill on his desk by the middle of February. First it must pass the full House and Senate in the next few weeks. Then, the competing versions would have to be reconciled.

To accommodate the $275 billion infusion of tax cuts and even more in new federal spending, the measure would increase the legal limit on borrowing by the federal government by $825 billion, to $12.1 trillion. That means the so-called debt limit will have increased by $1.5 trillion since October.

Unlike the House plan, which moved through several committees this week in preparation for a floor vote Wednesday, the Senate measure is likely to pick up at least some Republican support.

Republicans are particularly pleased with provisions extending tax cuts for the purchase of new plants and equipment and allowing money-losing businesses to claim refunds on taxes paid up to five years ago.

Stimulus plan 

Workers making $75,000 or less would be eligible for the full $500 tax cut, intended to offset the pain of Social Security payroll taxes, with couples earning up to $150,000 and filing joint returns eligible for a $1,000 credit. The benefits would be gradually phased out so that people making between $75,000-$87,500 and couples earning $150,000-$175,000 would get smaller tax cuts.

Unlike the $600 per worker lump-sum rebates issued last year, taxpayers would have the option of having less withheld from their paychecks. The idea is that people would spend more on goods and services immediately, rather than saving the tax cut or using it to reduce credit card debt.

In a statement, Baucus said the stimulus bill “will create green energy jobs, highway jobs, health care jobs and other opportunities for folks to get back on their feet.”

The Appropriations panel is expected to release details of its plan later Friday.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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