CQ TODAY ONLINE NEWS
– ECONOMIC AFFAIRS
Updated Feb. 6, 2009 – 11:55 p.m.
Senate Democrats Announce Deal on Stimulus Proposal
By Richard Rubin, Joseph J. Schatz, Paul M. Krawzak and David Clarke, CQ Staff
The Senate cleared the way for a vote next week on a massive — but pared-back — economic stimulus plan, after reaching a compromise Friday that will win the support of enough Republicans to get the bill through the chamber.
The roughly $780 billion plan does not include funding for school construction and some other programs favored by many Democrats. But at least some tax and spending provisions added to the bill by the Senate in the past few days apparently would be preserved, so the exact price tag and other details were in flux.
Democrats appeared to be hanging together on the plan spearheaded by a group of moderate senators, despite some grumbling about the changes needed to attract a handful of GOP votes. Susan Collins , R-Maine, and Arlen Specter , R-Pa., are supporting the deal; Olympia J. Snowe , R-Maine, also appears likely to vote “yes.”
Debbie Stabenow , D-Mich., confirmed that the three Republican votes are needed to reach the goal of 60. The compromise plan will be offered as an amendment to the bill (
A vote to cut off debate on the legislation (
The tradeoffs needed to get enough votes for the plan in the Senate presaged tough bargaining with the House before a final bill is delivered to President Obama, who, according to one lawmaker, signed off on the Senate deal. Top House Democrats were already complaining about the Senate moves before the agreement was formally announced.
The compromise would cut $108 billion from the original Senate bill, including $83 billion in spending and $25 billion in tax measures.
The single biggest spending cut would come out of a fund meant to help states avoid cuts to their own spending, especially in schools and universities. The compromise trims that funding to $39 billion, a $40 billion reduction, according to a chart distributed by Sen. Ben Nelson , D-Neb., one of the authors of the compromise. The House provided $79 billion in the version of the stimulus it approved Jan. 28.
Funding to increase broadband access in rural areas and other underserved areas would be reduced by $2 billion, from $9 billion to $7 billion. That’s still more than twice as much as the $3.2 billion in the House bill.
The Senate proposal also trims funding for the Byrne justice grant program, which provides assistance to various law enforcement programs. The compromise cuts $450 million from the Byrne grants, reducing funding from $1.5 billion to $1.05 billion, according to Nelson’s chart. The House allocated $3 billion for Byrne grants.
Other changes to the Senate plan would include scrapping a provision that allowed some business tax credits to be carried back for five years instead of one and accelerating use of low-income housing tax credits, saving $9 billion; scaling back a subsidy under the COBRA program, which provides health insurance for people who lose their jobs, to 50 percent of the premium, down from 65 percent, saving $5 billion; and setting the phase out for a new payroll tax credit at $70,000 for individuals and $140,000 for couples, instead of $87,500 and $175,000, saving $2 billion.
White House Intervention
Friday’s events were the culmination of several days of bargaining by a group of Senate moderates from both parties over cutting funding they thought would not help the economy immediately and should be considered outside of the stimulus bill. The group was led by Nelson and Collins, both of whom were in and out of meetings throughout the day with Majority Leader Harry Reid , D-Nev.
Congressional Democrats and Obama continue to warn that a bill must be enacted quickly before the struggling economy deteriorates further. The legislation is Obama’s top short-term priority, and the Democrats’ goal is to have it on his desk by the end of next week.
The best shot at getting the Republican votes needed in the Senate was to make a deal with the group of moderates. To that end, White House Chief of Staff Rahm Emanuel came Friday afternoon to the Capitol to help close the deal and then sell it to Democratic senators wary of seeing spending cut from the plan. The Democratic leadership held an evening meeting to convince the broader caucus to support the plan.
In a statement late Friday, White House press secretary Robert Gibbs said, “On the day when we learned 3.6 million people have lost their jobs since this recession began, we are pleased the process is moving forward and we are closer to getting Americans a plan to create millions of jobs and get people back to work.”
Collins, Specter, and Nelson took to the Senate floor to announce the deal. It “pares back a very substantial amount of money that we believed did not belong in the bill,” Nelson said.
“This proposal is the culmination of much deliberation and debate by so many of our colleagues on both sides of the aisle,” Collins said, citing job losses in Maine and adding that Americans “don’t want to see us dividing along party lines on the most serious crisis facing our country.”
Other Republicans grumbled about the moderates’ decision. “This is not bipartisan,” said John McCain , R-Ariz., who joined other GOP senators in continuing to decry the size of the package and what they say is unnecessary spending in the plan.
Every Democratic vote will be needed, and John Kerry , D-Mass., said his home state Democratic colleague, the ailing Edward M. Kennedy , will vote on the bill.
“It’s one of those compromises that, I think, will probably get the bill through,” said Tom Harkin , D-Iowa. “All those cuts in education, all the money taken out in prevention in health, no school construction money in here — that’s the deal the Republicans drove. So people ought to know that’s why we’re not getting that money.”
Debating Numbers
The deal would reduce the cost of the base bill to about $780 billion, but this does not include spending and tax provisions added to the bill during Senate debate, according aides and senators. When those amendment are added in, Republican aides argued, the bill’s price tag is $827 billion.
The bill cost $884.4 billion when brought to the floor. Negotiators used that version of the legislation as the base for the deal. Budget Committee Chairman Kent Conrad , D-N.D., said that made the most sense because the version being amended on the floor was a “moving target.”
Senate Democrats said they were unsure exactly how the procedure would work for including the changes from the Collins and Nelson plan while also incorporating the amendments adopted on the floor. But Majority Whip Richard J. Durbin , D-Ill., and Charles E. Schumer , D-N.Y., said the intent is to have the amendments already adopted on the floor included in the bill passed by the Senate.
The talk of cuts in the Senate was causing consternation among House leaders, especially regarding education initiatives.
“Education is fundamental to everything we are trying to do,” House Speaker Nancy Pelosi , D-Calif., said before the deal was announced. “These cuts are very dangerous. The House package was put together very carefully. I am very much opposed to the cuts proposed in the Senate.”
Shuttle Diplomacy
The prospects of a deal seesawed throughout the day. Friday morning, Reid said he expected negotiations would produce something that could be voted on by the end of the day.
“This is a critical day for our country and this Congress,” he said.
But by mid-afternoon, Collins emerged from a meeting with Reid and said she was just beginning to review an offer from the Democratic leader. Asked how she felt, Collins said, “not as good as I felt earlier.”
She and Nelson had difficulty getting Republicans and Democrats to agree on which programs to cut. While they worked on the spending side, Snowe announced that she was working with leadership on changing the tax portion of the bill to cut tens of billions of dollars from the bottom line.
Collins said that she was pessimistic earlier in the day about the prospects for a deal when Reid offered her a proposal that would have reduced the package by only $63 billion, which Collins said she “rejected out of hand.” It was only after Emanuel got involved that a deal came together, Collins said.
Claire McCaskill , D-Mo., who had been working on the compromise, said the pressure from leadership was helpful.
“Eventually people are going to have to come down one side or the other,” she said. “Either we do something or we do nothing, and I think there’s an awful lot of pressure to do something.”
She added that most or all of what she called “junk” in the bill had been removed.
Pelosi urged her caucus members to “intensify the drumbeat across the country” for including key parts of House-passed package in the final bill. The legislation is expected to go to a House-Senate conference committee.
The debate took on new urgency after the Labor Department released new unemployment figures showing the loss of another 598,000 jobs in January, which pushed the unemployment rate to 7.6 percent.
“These numbers demand action. It is inexcusable and irresponsible to get bogged down in distraction and delay while millions of Americans are being put out of work. It is time for Congress to act,” Obama said.
“There may be provisions in the bill that need to be left out and some that need to be added. But broadly speaking, it is the right size. It is the right scope.”
Kathleen Hunter, Lydia Gensheimer, Bart Jansen, Catharine Richert and Edward Epstein contributed to this story.
First posted Feb. 6, 2009 10:35 a.m.
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