Stimulus bill likely to shrink as GOP, Obama trade ideas

McClatchy NewspapersFebruary 4, 2009 

WASHINGTON — This much is clear: Sometime soon, probably this month, President Barack Obama will sign an economic stimulus plan.

However, it probably will have at least $50 billion less spending than the Senate's current version does, and it probably will win a handful of Republican votes after lengthy White House-congressional negotiations.

Senators huddled on Wednesday — with each other and with Obama — trying to craft a plan that will get the 60 votes needed under Senate rules to stop any filibuster, the tactic that obstructs extended debate.

Republican moderates, joined by some Democrats, were looking for a way to pare the $900 billion-plus package by at least $50 billion, likely by cutting much of the education aid and a long list of small spending initiatives.

Late Wednesday the Senate approved a plan sponsored by Sen. Johnny Isakson, R-Ga., to give anyone who buys a home this year a tax credit of $15,000, or 10 percent of the price, whichever is less.

The Senate also approved an amendment that softens, but doesn't eliminate, the stimulus bill's "Buy American" provisions, which Obama is concerned could anger U.S. trading partners. The amendment requires that the provisions be "applied in a manner consistent with U.S. obligations under international agreements."

Sen. Olympia Snowe, R-Maine, met with the president at the White House and listed programs that she thought didn't belong in the stimulus package. She said the president was "very amenable" to the centrists' ideas but made no commitments.

Sen. Mel Martinez, R-Fla., was optimistic. "There's a great desire by a number of us to move pretty quickly," he said.

The Senate still hopes to pass the legislation by the end of the week, but the urge to reach final agreement is complicated by a variety of unusual and sometimes contradictory developments at the Capitol:

  • Obama is popular, the stimulus is his first major initiative and few lawmakers from either party want to appear defiant.
  • There's a bipartisan consensus that some sort of big package must be passed as soon as possible. The lawmakers get jolted almost daily by bad economic news and are likely to get more on Friday, when January jobless numbers are released.
  • Members of both parties are concerned that the current Senate bill is too loaded with projects that won't do anything to provide a quick economic stimulus. Education aid, many say, is a matter for states, not Washington.
  • At the same time, members see the package as a way to add favored projects, which increase the cost.

The biggest hurdle that Obama and congressional leaders need to overcome is convincing enough members that the bill would provide real stimulus.

"We are really trying to reduce things that have less value in terms of stimulus and investment and move it into a place where we know we really need the money," said Senate Budget Committee Chairman Kent Conrad, D-N.D. He was among 14 Democratic senators who met late Wednesday to discuss a compromise.

Yet Obama continued to defend the package's inclusion of long-range policy projects that would add few jobs in the next 18 months: "It is not merely a prescription for short-term spending — it's a strategy for long-term economic growth in areas like renewable energy, health care, and education," he said at the White House.

Also bothering some senators is the package's size. When talks began after the November election, lawmakers initially aimed to craft a $300 billion plan. With the inclusion of broad-based tax cuts, aid to states and a long list of spending projects, it grew to $819 billion in the House of Representatives and has now inched over $900 billion in the Senate.

Conservative Republicans say that $445 billion is enough. Their plan includes temporarily ending part of the payroll tax, lowering the bottom two income tax brackets and providing $32 billion to aid homeowners facing foreclosure. Gone would be aid to education and some health programs, as well as a long list of spending programs that many Republicans, as well as Democrats, say have nothing to do with stimulus.

More likely to gain traction is the compromise being discussed by Conrad, Snowe, Martinez and others. Leading the effort is Sen. Ben Nelson, D-Neb., who also met with Obama Wednesday. Among their possible spending cuts are $445 million for computer related expenses at the Agriculture and Energy departments, more than $1 billion in medical research, $650 million for the analog-to-digital television conversion and $1 billion to alleviate overcrowding in federal prisons.

There's a complication, however: Even as members rail against the bloated bill, they can't resist adding projects. The home tax credit would cost about $20 billion, for instance.

Similarly, Maryland Sen. Barbara Mikulski's $11 billion tax break for most car buyers sailed through the Senate on Tuesday. Sen. Sam Brownback, R-Kan., complained that the overall bill "has been put together too hurriedly," then sided with Mikulski, saying that her plan "will actually end up moving car sales, helping the industry, helping the automobile manufacturers and the whole industry of dealerships."

Senate Finance Committee Chairman Max Baucus, D-Mont., tried to stop the effort, reminding senators that the auto industry is getting billions in emergency aid from other government sources. And, he argued, a new break would encourage more consumer debt, "when debt is becoming a problem in this country." He lost a key procedural vote by a 3 to 1 margin.

What's probably needed next, leaders said, is a stronger push from Obama. He tried again on Wednesday:

"A failure to act and act now, will turn crisis into a catastrophe and guarantee a longer recession, a less robust recovery, and a more uncertain future," the president said. "Millions more jobs will be lost. More businesses will be shuttered. More dreams will be deferred."

Senate leaders also got a three-page letter from White House Budget Director Peter Orszag reminding them of Obama's "principles," notably that the bill "jump-start job creation with a direct fiscal boost" and revive the housing sector.

Even so, said Senate Republican leader Mitch McConnell of Kentucky, "at some point, we're going to have to learn to say no."

ON THE WEB

Congressional Budget Office analysis of Senate stimulus plan

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McClatchy Newspapers 2009

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