An economic stimulus bill is headed for passage in Congress by the end of this week after lawmakers agreed on a $789 billion plan that aims to stem the recession through a mix of government spending and tax cuts.
The House will vote tomorrow on the bill, Speaker Nancy Pelosi, a California Democrat, said today.
Senate Majority Leader Harry Reid, a Nevada Democrat, said a vote in his chamber will come “tonight or tomorrow,” while Senator Jon Kyl, an Arizona Republican, said his colleagues won’t allow a vote today because a text of the legislation had not been released yet.
“Are you kidding,” Kyl said when asked about the prospects for a Senate vote today. He said he and other Republicans won’t “just turn around and vote on it before we even have a chance to look at it.”
Following weeks of debate and negotiations in Washington, Reid announced yesterday that “middle ground” was reached on a final measure. President Barack Obama, who has been pressing for quick approval, thanked lawmakers for their work. He said the measure could save or create 3.5 million jobs, including ones at Caterpillar Inc.
‘Hard-Fought Compromise’
“The CEO of Caterpillar said that if this American Recovery and Reinvestment Plan is passed, his company would be able to rehire some of the employees they’ve been forced to lay off,” Obama said in a statement, referring to Jim Owens, chief executive officer of the construction equipment firm. Obama praised “Democrats and Republicans in Congress who came together around a hard-fought compromise.”
The plan is smaller than the $838 billion bill approved earlier this week by the Senate or the $819 billion one the House passed last month. Lawmakers critical to moving the stimulus legislation through the Senate, including a trio of Republicans, insisted that the compromise be pared down to less than $800 billion.
“We had to nip and tuck and cut here and cut there and modify here and shape there,” said Senate Finance Committee Chairman Max Baucus, a Montana Democrat. “We had a long way to go to get to $789 billion, believe me.”
Payroll Tax Cut
Lawmakers said they reduced one of Obama’s main proposals, a plan to provide a $500 payroll tax cut to individuals and $1,000 to families. Under the compromise, the bill would provide $400 and $800 tax cuts, respectively. Retirees and disabled veterans who don’t pay payroll taxes would get a one-time payment of $250.
Lawmakers slashed a $35 billion plan designed to increase home sales. The Senate bill called for doubling a $7,500 tax credit for homebuyers. Under the compromise, that credit would increase by $500. The Senate proposal was supported by Centex Corp., the second-biggest U.S. homebuilder by sales, and the National Association of Home Builders.
Also scaled back was an $11 billion Senate proposal to help the auto industry by allowing new car buyers to write off the cost of interest payments on their loans and their sales and excise taxes. Under the compromise, estimated to cost $2 billion, buyers would be able to deduct the sales and excise taxes on cars purchased this year.
Business Tax Cut
A proposed business tax cut that would have allowed companies to convert losses into tax refunds was all but eliminated. Baucus said the provision would have let companies claim $67.5 billion in refunds this year and next year.
House Financial Services Committee Chairman Barney Frank said today that lawmakers dropped a proposed fix for the troubled HOPE for Homeowners program to keep the bill’s price tag below $800 billion. The program, which allows the refinancing of subprime loans into government-backed loans, has had few takers since it was created last year because lawmakers said they made its enrollment terms too tough.
Lawmakers also dropped provisions, opposed by Wall Street, which would have required companies taking money from the government’s Troubled Asset Relief Program to repay the cash portions of bonuses topping $100,000, Baucus said.
A one-year cut in the alternative minimum tax was retained in the bill.
The bill would spend $59 billion to increase aid to the jobless. It would extend unemployment benefits by 20 weeks and boost weekly benefits by $25. It also would expand a 65 percent subsidy to help the unemployed continue buying health insurance from their former employers.
Highway Spending
Other spending includes $29 billion for highway construction projects, $7 billion to expand access to broadband and $11 billion to renovate the nation’s electrical grid. The measure also would provide $15.6 billion for Pell college tuition grants, $8 billion for rail projects, $5 billion to weatherize low-income homes and $4.5 billion to make federal buildings more energy efficient.
The plan retains “Buy American” provisions for material used in construction projects it funds, though such rules cannot be implemented in a way that violate international trade agreements.
The agreement was a product of intense negotiations that lasted late into the night Feb. 11 and much of yesterday. Democrats who control the House and Senate had stressed that they wanted to hammer out an agreement before a week-long congressional recess starts on Presidents Day, Feb. 16. Obama also spent much of this week urging lawmakers to quickly send him a bill.
“There’s nothing like a deadline to force people to give and take a little bit,” Baucus said yesterday.
White House Aides
White House aides involved in the compromise talks included Chief of Staff Rahm Emanuel, Budget Director Peter Orszag and Deputy Budget Director Rob Nabors.
Senator Susan Collins of Maine, one of the three Republicans whose support was needed to pass the Senate’s stimulus bill, hailed the cuts made to produce the $789 billion plan. She said the measure “reflects our efforts to truly focus this bill on programs and policies and tax relief that will help turn our economy around.”
Senate Minority Leader Mitch McConnell, a Kentucky Republican, said in a statement he saw little in the compromise to change his opinion that the plan remains fundamentally flawed.
“It still misses the mark,” he said. “This unprecedented spending of taxpayer dollars is not timely, targeted nor temporary and it fails to address the underlying problems with the economy. American families know they have a limit on spending their hard-earned money but now they must be wondering if the government has any limits on spending it for them.”
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