CE Week #2: “Deal Reached in Congress on $789 Billion Stimulus Plan”
WASHINGTON — House and Senate leaders on Wednesday struck a deal on a $789 billion economic stimulus bill after little more than 24 hours of rapid-fire negotiations with the Obama administration, clearing the way for final Congressional action later this week.
The package of spending increases and tax relief, intended to spur an economic recovery and create jobs by putting money back in the pockets of consumers and companies, ended up smaller than either the House or Senate had proposed.
Many Democrats would have preferred a larger bill, but agreed to pare back, including cuts to favored education and health programs, to win three crucial Republican votes in the Senate.
“Legislation is the art of compromise, consensus building, and that’s what we did,” the Senate majority leader, Harry Reid of Nevada, said in announcing the accord.
The House was poised for a final vote as early as Friday, with the Senate to follow, clearing the way for President Obama to sign the bill by Monday. The White House is considering a prime-time bill signing ceremony, and on Wednesday asked the television networks if they would air the event.
In a statement, the president thanked Congress for agreeing to a measure that he said would save or create 3.6 million jobs.
“I’m grateful,” Mr. Obama said, “for moving it along with the urgency that this moment demands.”
The deal reflected a calculated gamble by Mr. Obama in the first weeks of his term. To win Republican votes, the final stimulus package is considerably leaner than what many economists say is now needed to jolt the economy, given its grave condition.
But it is unclear if Mr. Obama will be able to claim credit for bringing change to Washington by winning bipartisan support for his first major piece of legislation. Not a single House Republican voted for the bill when it came to the floor two weeks ago, and despite many compromises in the Senate, only three Republicans came on board.
The final bill includes $507 billion in spending programs and $282 billion in tax relief, including a scaled-back version of Mr. Obama’s middle-class tax cut proposal, which would give credits of up to $400 for individuals and $800 for families within certain income limits. It will also provide a one-time payment of $250 to recipients of Social Security and government disability support.
House Democrats, angry over some cuts, particularly for school construction, initially balked at the deal and delayed a final meeting on Wednesday between House and Senate negotiators.
Democratic officials said Speaker Nancy Pelosi felt that Mr. Reid went too far by announcing a deal before it was vetted by her office and discussed by House members in an emergency caucus meeting, setting off the last-minute flare-up.
Ms. Pelosi said at a news conference that the delay helped House Democrats win some final concessions, including an agreement to let states use some money in a fiscal stabilization fund for school renovations. “There is no question that one of our overriding priorities in the House was a very strong commitment to school construction,” she said. “That’s still in the bill.”
But they soon relented and the meeting got under way in a packed Lyndon B. Johnson Room on the Senate side of the Capitol.
Despite the show of pique, for Democrats the stimulus bill is the most prominent display yet that they now fully control Washington. Their ability to push the package forward represented a turnabout from years of losing battles under President George W. Bush. For Republicans, it underscored the limits of their diminished ranks.
Even trimmed to $789 billion, the recovery measure will be the most expansive unleashing of the government’s fiscal firepower in the face of a recession since World War II.
And yet it seemed almost trifling compared with the $2.5 trillion rescue plan for the financial system — a combination of loans to banks and incentives to bring private capital into the banking system — announced on Tuesday by Treasury Secretary Timothy F. Geithner.
Although the final legislative language was not immediately available, lawmakers said the bill contained more than $150 billion in public works projects for transportation, energy and technology, and $87 billion to help states meet rising Medicaid costs.
Despite intense lobbying by governors around the country, the final deal slashed $25 billion from a proposed state fiscal stabilization fund, eliminated a $16 billion line item for school construction and sharply curtailed spending to provide health insurance for the unemployed.
In driving down the total cost — from $838 billion for the Senate stimulus bill and $820 billion for the House-passed measure — lawmakers also reduced the Senate’s proposed tax incentives for buyers of homes and cars, which hold big public appeal.
The final agreement retained a $70 billion tax break to spare millions of middle-income Americans from paying the alternative minimum tax in 2009. Some Democrats decried the provision as a costly addition that would not lift the economy and that Congress would have approved, regardless of the recession.
After huddling in Ms. Pelosi’s office on Tuesday until nearly midnight, top White House officials and Congressional leaders had all but ironed out the differences between the House and Senate versions of the stimulus by noon on Wednesday.
Even before the last touches were put to the bill, some angry Democrats said that Mr. Obama and Congressional leaders had been too quick to give up on Democratic priorities. “I am not happy with it,” said Senator Tom Harkin, Democrat of Iowa. “You are not looking at a happy camper. I mean they took a lot of stuff out of education. They took it out of health, school construction and they put it more into tax issues.”
Mr. Harkin said he was particularly frustrated by the money being spent on fixing the alternative minimum tax. “It’s about 9 percent of the whole bill,” he said, “Why is it in there? It has nothing to do with stimulus. It has nothing to do with recovery.”
But even as Congressional leaders and top White House officials went through the package with a carving knife, it was clear that the three Republicans who agreed to support the bill in the Senate wielded extraordinary power, and along with conservative Democrats, had put a firm stamp on the stimulus package.
For instance, negotiators opted to keep many of the Senate’s reduced spending provisions, but they were careful to maintain an additional $6.5 billion for medical research that was inserted at the insistence of Senator Arlen Specter, Republican of Pennsylvania, who is a cancer survivor. He was one of the three Republican supporters of the recovery package.
“I think it is an important component of putting America back on its feet,” Mr. Specter said, though he added that it was still a difficult vote “in view of the large deficit and national debt.”
The Senate bill came together only after a bipartisan group of centrist senators, led by Susan Collins, Republican of Maine, and Ben Nelson, Democrat of Nebraska, reached a deal to trim the cost of the package to $838 billion from more than $920 billion.
“These aren’t easy times, obviously for America,” said Senator Olympia J. Snowe, Republican of Maine, who was also a member of that group. “Given the gravity of the circumstances economically, I thought it was important to be part of a process that could yield a consensus-based solution.”
But the majority of Republicans continued to criticize the stimulus measure on Wednesday as a bloated and ill-designed spending bonanza by Democrats on favored projects that would not help lift the economy out of recession but would permanently expand the federal government and plunge future generations of Americans deep into debt.
“Yesterday the Senate cast one of the most expensive votes in history,” said the Republican leader, Senator Mitch McConnell of Kentucky. “Americans are wondering how we’re going to pay for all this.”
Indeed, the formal House-Senate conference meeting, usually an elaborate parliamentary ritual with reams of legislative paperwork strewn across cluttered conference tables, instead served mostly as a live, televised forum for some of the most powerful Democrats and Republicans in Congress to trade barbs.
Senator Charles E. Grassley, Republican of Iowa, complained that despite Mr. Obama’s call for bipartisan cooperation, Republicans had largely been shut out. “We didn’t have a chance to negotiate,” Mr. Grassley said.
Robert Pear, Kate Phillips and Jeff Zeleny contributed reporting.
I share Iowa Senator Tom Harkin’s frustration with the edited bill. Why cut things that are important nationwide to people of all income levels like education and health and put it towards tax issues? In my opinion the money is better spent building schools, giving teachers higher pay, or even some sort of stipend for those teachers with outstanding records or long term service, say 20 plus years of teaching, and providing necessary funding for supplies. Books, desks, chairs even, we may not realize it being as lucky as we are going to Mt. Spokane but there are schools who can’t afford enough books to provide the students the education they deserve and then the teachers who work there just give up on the kids because they feel that if the state doesn’t care enough about the kids to provide the necessary tools to instruct them then shouldn’t bother caring because they can’t do anything to make the situation better. It really irks me that so much was cut from from education and health care, I think that other things could have been cut before that.
It does make me happy that the cost of the stimulus package has been reduced so much, it’s still and exorbitant amount of money but much better than two and a half trillion dollars.
Connection: Governing is compromise. No matter what we say the stimulus package wouldn’t have passed without the compromise and unfortunately they had to sacrifice education spending to appease some republicans and get the necessary votes to get the rest of it through the maze that is policy making in the United States.
A response to Madelin’s Post
I disagree that it’s an exorbitant amount of money, no cost is too great to stimulate our economy. That said, I am not an economist, so I don’t even know if it will fulfill it’s function and actually turn the economic downturn into an upswing. Given how pessimistic and generally doom and gloom the American people are about it, probably not. The economy does rely on our consumer confidence, and it is honestly fairly low right now. However, I do agree that the non-stimulus portions of the package could have done with passage, education funding can never be wasted, and it helps the economy down the line when our schools produce skilled individuals that can enter the workforce. Health care is another thing that really isn’t much of a stimulus to the economy, but it would have been nice to see it passed. One of the interesting things was that again, it came down to the centrists to compromise and work together to get a bill that could be more supported. I find it unsurprising that despite the Obama campaign promises of bipartisanship and such, that Republicans are still being shut out, and the two parties are still trading jabs. It makes you wonder what it would take to get a unanimous vote on anything in either house.
In response to Maddy,
I too think that it would be nice to spend more on education and buy books for schools that can not afford it. Of course I think outstanding teachers deserve more pay. I would hate to be a teacher. However, this was a stimulus package, and I fail to see how increasing spending in schools would stimulate the economy like tax issues do. You say that you re happy that the cost of the stimulus package has been cut so much. Why do you think that is? They had to cut the most unneccesary things. I’m not saying that healthcare and education are not important, but increasing spending on either will not boost the economy. Paticularly healthcare. One thing that Tom Harkin did say that I agree with is “Mr. Harkin said he was particularly frustrated by the money being spent on fixing the alternative minimum tax. ‘It’s about 9 percent of the whole bill,’ he said, ‘Why is it in there?’” I guess 9 percent seems a little high, but I still think that cutting education and healthcare was for the best, not becacause Americans don’t need it, but because I don’t think spending on those two things woud stimulate the economy.
In Response to Madelin Copus:
I completely agree with you. You would think that education would be one of our top priorities but the bill “cuts things that are important nationwide to people of all income levels like education and health and put it towards tax issues.” You would think that the folks in Washington want the next generation to be well educated so that they can make just as big a difference as the current lawmakers are.
“We may not realize it being as lucky as we are going to Mt. Spokane but there are schools who can’t afford enough books to provide the students the education they deserve.” Yes we are very lucky to have everything we need. It is sad that other schools across our country don’t. I also agree with the opinion of the teachers you put forward. Who would want to teach well when they don’t have the proper materials? I think we need to take a serious look at what we are putting as top priorities in our society. Giving children a chance to have a bright and promising future should be right up there with defense spending and tax issues. I don’t know why this isn’t a priority in our nations capital but I strongly believe education should be.