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2-7&9-09 New York Times on vagaries of Fed Stimulus Package bill
February 8, 2009 'Divisions Over the Competing Stimulus Bills' "Congress is racing to try to finalize the legislation this week...But the competing bills now reflect substantially different approaches. The House puts greater emphasis on helping states and localities avoid wide-scale cuts in services and layoffs of public employees. The Senate cut $40 billion of that aid from its bill, which is expected to be approved Tuesday..."

February 7, 2009 'Senators Reach Deal on Stimulus Plan as Jobs Vanish' "...The biggest cut, roughly $40 billion in aid to states, was likely to spur a fierce fight in negotiations with the House over the final bill. Many states, hit hard by the recession, face wrenching cuts in services and layoffs of public employees as they struggle to comply with laws requiring them to balance their budgets...When debate began this week, the price tag on the Senate version of the stimulus bill was roughly $884 billion, but it grew to more than $900 billion as senators added provisions including tax breaks totaling $30 billion for purchases of homes and cars..."

February 8, 2009 Divisions Over the Competing Stimulus Bills By DAVID M. HERSZENHORN WASHINGTON — The Senate agreement on a roughly $827 billion economic stimulus bill sets up tough negotiations with the House, primarily over tens of billions of dollars in aid to states and local governments, tax provisions, and education, health and renewable energy programs. Congress is racing to try to finalize the legislation this week. The price tag for the Senate plan is now only slightly more than the $820 billion cost of the measure adopted by the House. Both plans are intended to blunt the recession with a combination of tax cuts and government spending on public works and other programs to create more than three million jobs. But the competing bills now reflect substantially different approaches. The House puts greater emphasis on helping states and localities avoid wide-scale cuts in services and layoffs of public employees. The Senate cut $40 billion of that aid from its bill, which is expected to be approved Tuesday. The Senate plan, reached in an agreement late Friday between Democrats and three moderate Republicans, focuses somewhat more heavily on tax cuts, provides far less generous health care subsidies for the unemployed and lowers a proposed increase in food stamps. To help allay Republican concerns about the cost, the Senate proposal even scales back President Obama’s signature middle-class tax cut. The Senate plan also creates new tax incentives to encourage Americans to buy homes and cars within the next year. Republican opponents continued to rail against the stimulus plan on the Senate floor on Saturday, though it appeared they would not have the votes to stop it. The negotiations in Congress will test whether Democrats, who say they won a mandate in November to pursue their goals, are willing to give up some favored long-term policy initiatives to win over more Republican votes. The talks will also test whether any but the most moderate Republicans will be willing to support the Obama administration, or whether they will simply recoil in an opposition stance. Speaker Nancy Pelosi, who was in Williamsburg, Va., on a retreat with her fellow House Democrats on Friday, called the emerging Senate cuts to the stimulus program “very damaging” and said she was “very much opposed to them.” But after the Senate reached a deal, Ms. Pelosi expressed resolve to complete the legislation in the days ahead. Mr. Obama, who has made the economic recovery effort the centerpiece of his agenda, is expected to take a stronger hand in the negotiations and will embark on an aggressive public lobbying campaign. He will hold a meeting in Indiana on Monday, followed by a formal White House news conference, the first of his term, in prime time on Monday night. He will pitch the plan again on Tuesday in Florida and on Wednesday in Virginia. In his weekly radio and Internet address on Saturday, the president praised the Senate deal and urged quick passage of a final bill. “The time for action is now,” Mr. Obama said. “If we don’t move swiftly to put this plan in motion, our economic crisis could become a national catastrophe.” Also on Monday, Treasury Secretary Timothy F. Geithner is expected to announce the broad outlines of a rescue plan for the financial industry. The administration hopes that the announcement will quiet some critics in Congress who say not enough is being done for the housing sector. After Senate Democrats reached their deal with moderate Republicans on Friday, Republicans who are more conservative refused to put the legislative process on a fast track. Senator David Vitter, Republican of Louisiana, insisted that the deal required careful deliberation and said he would spend the weekend reviewing it, even though it was all but certain that he would not support the measure. As a result, the Senate met for a rare Saturday session, and Republicans delivered some of their harshest criticism of Mr. Obama since he took office, suggesting that he was pressing Congress to act irresponsibly by warning of imminent catastrophe. “In discussing with the American people his approach to the stimulus of our economy, he has first really used some dangerous words,” said Senator Jon Kyl of Arizona, the No. 2 Republican. Mr. Kyl added, “It seems to me that the president is rather casually throwing out some careless language.” The majority leader, Senator Harry Reid of Nevada, said Congress would move quickly to get the bill into conference, in hopes of sending the bill to the White House by the week’s end. As it stands, three Republicans are expected to join the 58 Democrats in favor of the bill, and the negotiations may tilt slightly in the Senate’s favor as officials try to keep that coalition in place. Both the House and the Senate must vote again to approve the final legislation, leaving a chance of unexpected pitfalls. The main fight is likely to be over the Senate’s proposal to cut $40 billion from proposed aid to states. Such aid does not necessarily lift the economy, but it prevents states from carrying out cuts that could make the recession worse, and the money can be deployed quickly, a challenge in any stimulus. The $40 billion was the largest cut in a paring back of the Senate proposal that helped seal a deal between Democrats and the moderate Republicans, thanks to the efforts of a bipartisan group led by Senators Susan Collins, Republican of Maine, and Ben Nelson, Democrat of Nebraska. Another big difference is the Senate’s inclusion of nearly $70 billion to protect thousands of middle-class Americans from paying the alternative minimum tax in 2009, sparing them from a system originally intended to prevent the wealthy from claiming too many tax deductions. House Democratic leaders have indicated a willingness to retain that provision even though it could require them to give up tens of billions of dollars in favored spending programs and force them to make wrenching choices. Adjusting the alternative minimum tax is also unlikely to give much extra lift to the economy, because Congress has adopted similar fixes for years and would probably have done so again regardless of the stimulus. Other trims the Senate settled on eliminated $19.5 billion in construction aid for schools and colleges and sliced proposed new aid for the Head Start early childhood program by $1 billion. In some cases, the cuts to the Senate bill brought it closer to the House proposal. For instance, the senators reduced financing to expand broadband data networks in rural and underserved areas to $7 billion from $9 billion. The House has proposed $6 billion. Some of the Senate’s changes clearly reflected the personal priorities of lawmakers, especially the moderate Republicans who were instrumental in reaching an accord. The Senate deal, for example, reduced proposed aid to NASA and the National Science Foundation by $200 million each. But it added $6.5 billion for medical research at the National Institutes of Health, favored by Senator Arlen Specter of Pennsylvania, one of the three Republicans supporting the plan Even with Democrats controlling both chambers, the negotiations are likely to be difficult. House Democrats have shown little inclination to cater to Republican wishes, especially given the unwillingness of Republicans to vote for the bill. So far, Mr. Obama and his aides have strongly resisted any change to his proposal for a middle-class tax cut, which was one of his main campaign promises. It would provide a tax credit of up to $500 for individuals and up to $1,000 for couples, with the credit phasing out for individuals earning more than $75,000 a year and couples more than $150,000. The Senate bill would lower that income cap to $70,000 for individuals and $140,000 for couples, saving the government $2 billion but potentially reducing the effectiveness of a tax break that is intended to lift consumer spending. It is unclear how Congress will deal with two provisions aimed directly at general consumers, including an $11 billion tax break in the Senate bill to spur car sales by allowing buyers to deduct any sales tax and one year of loan interest. The chambers must reconcile competing homebuyer tax credits. To stabilize real estate prices, the House would give first-time homebuyers a tax credit of 10 percent of a home’s cost, up to $7,500, with income caps reducing the credit for individuals earning at least $75,000 and couples earning $150,000. The Senate plan includes a more generous credit of 10 percent, up to $15,000, that would be available to all homebuyers, with no income limits. A formal conference to resolve the differences between the two bills is expected to begin by midweek. In the Senate debate, critics of the plan said their main objective was to support proposals that would quickly create jobs or spur consumer spending. But there were Republicans who vehemently opposed some spending programs in the bill, saying the federal government was overstepping its bounds and should not be getting involved in taking up local responsibilities like school construction. Many of the education programs in the bill are top priorities of the powerful chairman of the House Appropriations Committee, Representative David R. Obey, Democrat of Wisconsin. In debate on the Senate floor, many Republicans, including the party’s defeated presidential nominee, Senator John McCain of Arizona, offered amendments to reduce spending and broaden the tax cuts in the plan. The Democrats easily swatted those down. Critics of the stimulus plan say Democrats have packed it not with the most effective short-term proposals to lift the economy, but with favored, liberal spending programs that will drastically increase the national debt and cause long-term fiscal harm. “A bill that was meant to be timely, targeted and temporary has instead become a Trojan horse for pet projects and expanded government,” the Republican leader, Senator Mitch McConnell, said in a floor speech on Friday. Although Mr. Obama made substantial efforts to reach across party lines, not one of the House Republicans voted for the stimulus measure. They complained that House Democrats shut them out of the process. In the Senate, too, talks proved excruciatingly difficult. In the end, the only Republicans whose support the Democrats won were Mr. Specter, Ms. Collins and Senator Olympia J. Snowe of Maine. This copy is for your personal, noncommercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers here or use the "Reprints" tool that appears next to any article. Visit www.nytreprints.com for samples and additional information. Order a reprint of this article now. ________________________________________ February 7, 2009 Senators Reach Deal on Stimulus Plan as Jobs Vanish By CARL HULSE and DAVID M. HERSZENHORN WASHINGTON — Senate Democrats reached an agreement with Republican moderates on Friday to pare a huge economic recovery measure, clearing the way for approval of a package that President Obama said was urgently needed in light of mounting job losses. The deal, announced on the Senate floor, was a result of two days of tense negotiations and political theater. Mr. Obama dispatched his chief of staff to Capitol Hill to help conclude the talks and reassure senators in his own party, and he called three key Republicans to applaud them for their patriotism. Earlier, when it looked as if a vote might take place Friday night, officials said, a government plane was dispatched to Florida to bring back Senator Edward M. Kennedy, a Massachusetts Democrat who has brain cancer. The fine print was not immediately available, and the numbers were shifting. But in essence, the Democratic leadership and two centrist Republicans announced they had struck a deal on about $110 billion in cuts to the roughly $900 billion legislation — a deal expected to provide at least the 60 votes needed to send the bill out of the Senate and into negotiations with the House, which has passed its own version. The pact, which is expected to be approved in the next few days, was concluded just hours after the Labor Department announced that 598,000 jobs were lost in January. The contraction in jobs is already steeper than in any other recession since at least the early 1980s. And economists warn that several more shoes are about to drop, a message that added urgency to the Senate deliberations. As the negotiations were under way, lawmakers said it was time to stop quibbling about the exact parameters of the legislation — which mixes safety-net spending, tax cuts and a huge infusion of dollars into federal programs — and to begin work toward a final agreement that could be sent to Mr. Obama next week. “Our country can’t wait another day for another approach,” said Senator Ben Nelson, a Nebraska Democrat who is a leader of the bipartisan coalition that worked out the agreement. The details were negotiated at an afternoon meeting in the office of the Senate majority leader, Harry Reid of Nevada, involving Mr. Reid, other top Democrats and two Republicans, Susan Collins of Maine and Arlen Specter of Pennsylvania. After they came to terms, the senators brought in the White House chief of staff, Rahm Emanuel, for assurance that the deal was acceptable to the administration. Mr. Emanuel signaled it was. “With today’s unemployment numbers reaching more than 3.6 million workers,” Mr. Emanuel said after the session, “delay and failure were not an option.” Mr. Obama called Ms. Collins and Mr. Specter, as well as Senator Olympia J. Snowe of Maine, another Republican expected to support the deal, to acknowledge they were acting against pressure from their party and, one official said, to thank them for their patriotism in helping advance the bill at a critical time. Earlier in the day, Mr. Obama urged Congress to act expeditiously. “It is inexcusable and irresponsible for any of us to get bogged down in distraction, delay or politics as usual while millions of Americans are being put out of work,” said Mr. Obama, who has recently shown less patience for Republican resistance to the bill. Most Senate Republicans remained opposed to the measure, criticizing it as a case study in excessive spending that would do little to lift the economy. Some conservatives indicated Friday night that they would push for time to study the new legislation before any final vote. “We want to stimulate the economy, not mortgage the future of our children and grandchildren by the kind of fiscally profligate spending embodied in this legislation,” said Senator John McCain of Arizona, the defeated Republican presidential nominee, who has emerged as a chief opponent of the proposal. Republicans were clearly irritated at the outcome and faulted those involved in working out the bargain. “When you say this was the best we could do, I disagree with you,” Senator Lindsey Graham of South Carolina said on the floor. “This not remotely close to what we could have done if we had sat down in a true bipartisan fashion and found a better way.” The Senate’s proposed cuts took aim at an array of popular spending programs that critics said should not be part of a fiscal recovery bill, even if they represent laudable policy goals, because they would not deliver a quick enough jolt to the economy. Even Mr. Obama’s signature tax cut for middle-class Americans was scaled back as part of the deal. Under the new plan, tax credits of up to $500 for individuals and $1,000 for couples would begin to phase out at lower income levels than first proposed, saving the government $2 billion. The biggest cut, roughly $40 billion in aid to states, was likely to spur a fierce fight in negotiations with the House over the final bill. Many states, hit hard by the recession, face wrenching cuts in services and layoffs of public employees as they struggle to comply with laws requiring them to balance their budgets. When debate began this week, the price tag on the Senate version of the stimulus bill was roughly $884 billion, but it grew to more than $900 billion as senators added provisions including tax breaks totaling $30 billion for purchases of homes and cars. Lawmakers said that by poring over the 736-page bill they had excised about $110 billion, bringing the total cost to about $780 billion — $40 billion less than the stimulus bill approved by the House last week. Because of consumer tax breaks and spending for health research that had been added in the Senate, the new total for the measure could be about $820 billion. But even the senators behind the compromise were uncertain of the number. In addition to the large cut in state aid, the Senate agreement would cut nearly $20 billion proposed for school construction; $8 billion to refurbish federal buildings and make them more energy efficient; $1 billion for the early childhood program Head Start; and $2 billion from a plan to expand broadband data networks in rural and underserved areas. The administration had initially hoped that it could win the support of as many as 80 senators, but that goal disappeared after House Republicans voted unanimously against the measure. As questions were raised about the total spending, getting even three or four Republican senators to sign on became difficult. Ms. Collins said she believed the changes had significantly improved the measure. Mr. Specter said that while he still had reservations, he had come to accept Mr. Obama’s push to enact the economic plan by mid-February. “I believe we do have to act,” Mr. Specter said, “and under the circumstances this is the best we can do.” But several other Republicans who had taken part in the talks said they could not support the compromise. “Unfortunately, there was too much in the Democratic counterproposal that was not stimulative,” said Senator George V. Voinovich of Ohio, “and that did not provide the jump-start our economy so desperately needs.” The Senate Republican leader, Mitch McConnell of Kentucky, said most Republicans remained unconvinced that the package would reinvigorate the economy. “You have to balance the likelihood of success versus the crushing debt that we’re levying on the backs of our children, our grandchildren and, yes, their children,” Mr. McConnell said. Mr. Reid urged Republicans to get behind the plan. “This is a critical day for this new Congress and our country,” he said. “Faced with this grave and growing economic crisis, Republicans must decide today whether they will join the president and Congressional Democrats on that road to recovery.”