IE 11 is not supported. For an optimal experience visit our site on another browser.

Senate passes $838 billion stimulus bill

President Barack Obama's economic recovery plan has passed the Senate and is on its way to difficult House-Senate negotiations.
/ Source: The Associated Press

Senate passage of an $838 billion stimulus bill triggered an intense round of late-night bargaining on Tuesday, with the White House and key congressional Democrats seeking agreement on a final compromise aimed at combatting the worst economic crisis in decades.

Democratic lawmakers said that in deference to Senate Republican moderates, it appeared the bill that eventually goes to President Barack Obama would be in the range of $800 billion — less than the Senate measure or a different bill that cleared the House several days ago.

"That's in the ball park," Senate Finance Committee Chairman Max Baucus said of the $800 billion figure Tuesday night.

Baucus had said earlier that $35.5 billion to provide a $15,000 homebuyer tax credit, approved in the Senate last week, would be cut back. There was also pressure to reduce a Senate-passed tax break for new car buyers, according to Democratic officials, while a $40 billion reduction in aid to states appeared likely to stick.

A provision limiting compensation for top executives of companies receiving federal bailout assistance appeared likely to be dropped altogether because of an unanticipated $11 billion budget cost. The officials who disclosed details of the talks did so on condition of anonymity, saying they were not authorized to discuss them.

Late-night negotiations
The White House weighed in strongly to try to resurrect funding for school construction eliminated during Senate dealmaking last week, a Democratic official said, but seemed resigned to limiting aid to the states for local school budgets to the $39 billion approved by the Senate on Tuesday by a 61-37 vote.

The late-night negotiations reflected an urgency on the part of the White House and the Democratic-controlled Congress to move quickly against a recession that has sent joblessness soaring. The officials added that bargainers hoped for an agreement as early as Wednesday.

Earlier, the Senate sailed to approval of its $838 billion economic stimulus bill with only three Republicans in favor, Sens. Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania.

Within hours of the Senate vote, White House Chief of Staff Rahm Emanuel and other top aides to Obama had made the trip to the Capitol for series of meetings that stretched well into the evening.

Snowe, Collins and Specter are demanding that the final bill resemble the Senate measure, which devotes about 42 percent of its $838 billion in debt-financed costs to tax cuts, including Obama's signature $500 tax credit for 95 percent of workers, with $1,000 going to couples.

The $820 billion House measure is about one-third tax cuts.

The Republican moderates also want the final bill to retain a $70 billion Senate plan to "patch" the alternative minimum tax, or AMT, for one year. The provision would make sure 24 million families won't get socked with unexpected tax bills more than a year from now during the 2010 filing season.

The AMT was designed 40 years ago to make sure wealthy people pay at least some tax, but is updated for inflation each year to avoid tax increases averaging $2,300 a year. Fixing the annual problems now allows lawmakers to avoid difficult battles down the road, but economists say the move won't do much to lift the economy.

Obama and his Democratic allies go into final negotiations on the economic rescue package with limited ability to make it more to their liking after the moderate Republicans — with support from Democrats such as Ben Nelson of Nebraska — wrung savings totaling $108 billion in spending from the measure.

The Senate moderates are essential if the final plan is going to pass and get to Obama's desk, so they're playing hardball.

"My support for the conference report on the stimulus package will require that the Senate compromise bill come back virtually intact," Specter warned in a statement.

The Senate has a well-earned reputation for emerging the winner in most House-Senate negotiations, since its rules make passing bills more difficult and typically require bipartisan votes. Senators tell the House that it's difficult for them to pass anything that departs from carefully wrought agreements.

Hence the likelihood the final measure will greatly resemble the Senate bill.

"I think they've got a lot of influence on the outcome," said Democratic Sen. Kent Conrad. "It has to do with the simple reality of getting the votes to pass. And whether somebody likes it or doesn't like it, there's a thing called reality."

House leaders are tempering expectations that they'll restore many of the cuts.

"You cannot allow the perfect to be the enemy of the effective and of the necessary, and we will not," House Speaker Nancy Pelosi said.

At the same time, Specter is fighting to preserve an enormous $10 billion increase for the National Institutes of Health, while Collins obtained $870 million for community health centers in talks last week.

Reid promised great progress during just the first 24 hours of talks, and the hope is to reach a deal quickly in order to get the plan to the White House within days.

The competing House and Senate plans have the same basic components designed to ease the worsening recession: hundreds of billions of dollars in government money to boost consumption and tax cuts designed to increase consumer spending and prod business investment.

Obama's allies recognize some of his priorities will be shaved. But they're not happy about the strong hand being played by the three Senate Republican moderates.

"It is so difficult talking with a body that is controlled by three people," said Democratic Rep. Charles Rangel, a lead House negotiator. "You have no idea."