Two Democrats on the Senate Finance Committee who represent storm-damaged states, Schumer and Menendez, above, would allow for a full deduction of cleanup expenses and waive penalties for early withdrawals from retirement plans.
Some lawmakers may prefer to move a disaster relief package now and consider further appropriations and tax proposals later. That scenario would follow a pattern used in response to earlier catastrophes, including the recovery effort after Hurricane Katrina in 2005.
It remains unclear whether a Sandy recovery package will ultimately move as stand-alone legislation or as part of a larger measure. Congressional leaders might try to attach Sandy relief to a year-end bill addressing taxes and automatic spending cuts.
Dan Coats of Indiana, the top Republican on the Senate Homeland Security Appropriations Subcommittee, said last week that how Sandy recovery legislation is handled could indicate how well talks on the fiscal cliff are proceeding.
“Clearly it is up to the leadership how they want to address it, whether they want to wrap it into a final package that we deal with or do it separately,” Coats said of the aid package. “That might be a pretty good indicator of whether they think we are going to get a deal or not.”
Alan K. Ota and Geof Koss contributed to this report.
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