Any planned tax rebate as part of an economic stimulus package may not have a big impact on the US economy until Christmas, the director of the US's Congressional Budget Office said on Tuesday.
Peter Orszag, whose agency provides impartial fiscal and economic advice to Congress, said that it would be a "major challenge" to send out tax rebates before June as the IRS is tied up with annual tax returns. "It is remarkable the world's leading economic power cannot get cheques out faster than that," he told a hearing of the Senate finance committee.
He added that experience with the 2001 tax rebate suggested the full effect of the move would not be felt for a further six months.
The administration unveiled a $140bn stimulus package on Friday focused on tax cuts for businesses and consumers. But some Congressional Democrats believe that enhanced spending on areas such as food stamps, unemployment insurance and road resurfacing might have more rapid and profound economic effects than tax rebates.
They are also concerned that any relief be targeted at low income-earners, as well as higher-earning taxpayers. Republicans reportedly want a refund of about $800 per person and $1,600 per household.
Max Baucus, the committee's chairman, floated the idea of making a tax rebate available to lower-income Americans, with a bonus for families with children.
Mr Orszag said such a proposal "would likely have a higher cost-effectiveness".
Henry Paulson, US Treasury secretary, urged Congress to assist in getting "money into our economy quickly" by helping to pass legislation on a stimulus package.
Congressional leaders were expected to discuss the stimulus plans at a meeting with George W. Bush, US president, on Tuesday. Harry Reid, Senate majority leader, said that legislation should be passed by mid-February.
The committee's leading Republican, Charles Grassley, also voiced concerns about the plans. "The only way the government can put money in someone's hands is by taking it from someone else's pocket," he said.
Taxing debateEconomic stimulus - the plan so far
● George W. Bush is pushing for a plan worth $150bn (£75bn), or roughly 1 per cent of US gross domestic product.
● A set of "principles" he unveiled last week focus on accelerated tax deductions for investment in equipment and tax rebates for taxpayers, designed to stimulate consumer spending - possibly rebates of about $800 for individuals and $1,600 for households.
● Democrats want greater emphasis on government spending - such as expanded unemployment benefit and food stamps - arguing that many low-income workers pay little or no income tax, yet are hardest hit by the slowing economy.
● Democrats believe a deal with the Bush administration can be reached by mid-February.