Congressional leaders agreed Wednesday on the details of a $789 billion stimulus package, an unprecedented attempt by the federal government to jolt the economy, create millions of jobs and ease the financial woes facing individuals, businesses and states.
The House is expected to vote on the plan today or Friday, and with Senate action quickly following, the legislation is set to arrive on President Barack Obama’s desk no later than Monday — the target Democratic leaders set last month for enacting it into law.
The final product is similar to the ideas Obama outlined when he took office Jan. 20, but it claims many co-authors, including House liberals who saw a rare opportunity to secure new social spending, as well as the three moderate Republican senators who demanded $100 billion in cuts as the price of their support.
Three months ago, the stimulus plan was envisioned as a $300 billion rescue package that the incoming Obama team had hoped would be enacted well before Inauguration Day. Instead, it became a politically charged first test for the Obama administration and the newly expanded Democratic Congress, as well as a rallying point for congressional Republicans.
The bill has four broad categories: tax breaks for individuals and businesses; investments in health care and alternative energy; funding for “shovel ready” infrastructure projects; and aid to state and local governments, including expanded benefits for individuals who are unemployed and lack health insurance.
After a tentative agreement was struck between Democratic leaders of the two chambers Wednesday afternoon, some House Democrats appeared eager to scuttle the deal, as lawmakers vented about deep reductions in education and other social programs. At one point, Democrats in a hastily called meeting jokingly chanted “We want more” before relenting.
Speaker Nancy Pelosi, D-Calif., later told reporters: “We have come to an agreement with the Senate as to how we will go forward and I think people are happy about that.”
There are some provisions “we wish that were still there,” she said, “but the fact is that there’s plenty there to create nearly 4 million jobs that the president has set as our goal.”
In announcing the deal, Senate Majority Leader Harry Reid, D-Nev., said: “Like any negotiation, this involved give and take — and if you don’t mind my saying so, that’s an understatement. But the agreement we’ve reached stays faithful to the principles.”
Obama has said that whether the legislation creates the millions of jobs he has promised will be the measure of its success or failure, and many economists remain highly skeptical about its potential for providing a significant boost to the sagging economy. But in the near term, the compromise stands as the first major achievement of the new administration.
Many details of the package remained elusive Wednesday night, but initial calculations showed that the bill includes about $280 billion in tax breaks, including a temporary fix to the alternative minimum tax and a new tax credit for homebuyers, although it was drastically reduced from the Senate-passed version. Spending for highways, bridges and other transportation projects is nearly $50 billion. The measure would provide an additional 20 weeks of unemployment payments and health-care subsidies for people who are out of work. Social Security recipients would receive an additional $250 payment, and the federal government’s contribution to the Medicaid program would increase dramatically.
Obama called the bill “a hard-fought compromise that will save or create more than 3.5 million jobs and get our economy back on track.” But despite acknowledging that he ceded some ground, the president secured many of his biggest priorities in the legislation, including the longer term health-care and energy investments that the administration views as a down payment on broader reforms.
To keep the pressure on, Obama will travel to Peoria, Ill., today to visit the headquarters of Caterpillar, a mainstay of his home state’s economy, which recently announced that it will lay off more than 20,000 workers. Obama said Jim Owens, Caterpillar’s chief executive, relayed that if the stimulus bill passes, “his company would be able to rehire some of those employees.”
Although a trio of GOP moderates — Sens. Arlen Specter, R-Pa., Olympia Snowe, R-Maine, and Susan Collins, R-Maine — succeeded in paring spending provisions written in the House and securing more tax relief, the changes did not make much of a dent in Republican resistance to the measure.
Two major sticking points heading into final negotiations were the increased Medicaid payments to states and nearly $20 billion in school construction funding, both top priorities for House Democrats and the White House. But Collins, in particular, opposed creating a separate federal program for school construction, and the Senate bill she helped negotiate included no school-construction provision.
Instead, Senate Republicans agreed to increase a general state fund to $54 billion, a portion of which could be spent rebuilding schools.
“We hung tough,” Collins said.
The White House conceded ground from the outset. One centerpiece of Obama’s original plan, promised to voters on the campaign trail, was a $3,000 business credit for job creation. But it drew bipartisan criticism, and the White House dropped it quickly.
This week, Obama agreed to scale back another tax break for individuals, one of the few elements in the bill that would have put money directly in the hands of taxpayers. The final package also will substantially reduce the Senate’s $15,000 tax credit for homebuyers.
While most of the key compromises involved cutting the legislation’s cost, negotiators did raise the amount of funding for highway, bridge and rail construction projects.
