Are House Democrats balking at stimulus bill agreement?

McClatchy NewspapersFebruary 11, 2009 

Senators negotiating a final compromise economic stimulus package said the House of Representatives and Senate agreed Wednesday on a $789.5 billion package that scales back tax breaks for new car and home buyers while restoring some cuts in state education aid and health care.

But after the announcement, a joint conference committee meeting scheduled for 3 p.m. was postponed after House Democrats did not show up.

Senators said they still expected an agreement later Wednesday, and it was unclear that the agreement had run into difficulties. Senate staff members said the delay was merely to allow House members who had been expected to oppose some aspects of the Senate bill to express their feelings privately.

According to Senators Ben Nelson, D-Neb., and Susan Collins, R-Maine, key moderates who helped craft the agreement, the new bill includes $54 billion for education, less than $79 billion House members had wanted and more than the $39 billion senators approved.

The new bill has no money for school construction, increases to $90 billion the amount of money that would be sent to states to help pay Medicaid costs, and also increases to $49.6 billion the amount of money that would be devoted to infrastructure projects.

The total cost would be well below the measures passed by both the Senate, whose price tag was $838 billion, and House, at $819 billion.

The negotiators' view is that as long as the cost stays at or below $800 billion, they would be able to attract some moderate Republican votes — crucial to Senate passage — even as some of the GOP favorite tax cuts are trimmed.

White House Chief of Staff Rahm Emanuel and Budget Director Peter Orzsag have been involved in the discussions. They and House Democratic leaders have been adamant that school cuts be restored.

The House on Jan. 28 approved a $79 State Fiscal Stabilization Fund to help states with education costs, as well as $20 billion for school construction. The Senate cut the fund to $39 billion and provided no money for construction.

Some, but not all, of those funds are likely to be restored, according to people close to the negotiations who couldn't be identified because they weren't authorized to speak publicly.

In addition, the negotiators are expected to increase the subsidy for unemployed workers under the COBRA health care program. The House approved a 65 percent subsidy, while the Senate put it at 50 percent.

Money would be saved by reducing tax breaks. One insider said that President Barack OBama’s “Making Work Pay” tax credit, which would effectively rebate $500 to 95 percent of taxpayers, could be cut back slightly.

More likely to be reduced is the homeowner’s tax credit the Senate adopted last week. The $15,000 credit, or 10 percent of the purchase price of a home, whichever is less, would cost the Treasury about $35 billion.

Also being eyed for a cut is the $11 billion tax break for new car buyers that the Senate adopted last week.

Such cuts, sources said, would most anger Republicans — but most of them won't vote for the bill anyway. The three Republican senators whose support of the Senate bill was crucial to getting the 60 votes necessary for passage under Senate rules are more concerned that the overall cost of the bill be capped around $800 billion than they are wed to specific tax breaks. Those three are the two GOP senators from Maine — Olympia Snowe and Susan Collins — and Arlen Specter of Pennsylvania.

It's not yet clear what other cuts may be needed to get the package below $800 billion. The House version was $819 billion, the Senate's $838 billion.

There is general agreement on a number of items, notably the funds to rebuild roads and bridges, about $87 billion to help states provide health care for the poor and disabled and a 20 to 33 week extension of unemployment benefits.

Also likely to remain in the bill is $70 billion fix to the alternative minimum tax.

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