House may vote Thursday on slimmed-down version of stimulus plan

WASHINGTON — House and Senate Democratic leaders, negotiating into the night to forge a compromise with moderate Republicans, reached agreement Wednesday on a $789 billion economic recovery bill that President Barack Obama has called critical to pulling the country out of its worst financial crisis since the Great Depression.

The bill, slimmed down and reworked to win the handful of GOP votes needed to assure final approval by the Senate, would finance a flurry of infrastructure and construction projects, extend unemployment benefits, subsidize health care coverage for those out of work, and provide tax relief for many. Democrats say it will create or preserve 3.5 million jobs nationwide. The House could vote on the bill as early as Thursday, the Senate soon after.

Republicans lined up early against the bill, saying it was bloated with unnecessary government spending programs, featured too few tax cuts, and would substantially increased the national debt. Until the three GOP moderates defected late last week, it remained possible that the minority would be able to delay the bill from moving forward and perhaps force radical changes.

Some Democrats complained that the package was not big enough, but said they had no choice but to accept it if the measure was to avoid a GOP filibuster in the Senate. And the stimulus package was both the first major initiative of the Obama administration and a critical first step in its plan for reviving the nation’s troubled economy.

“There is no choice here, colleagues,” Senate Finance Committee chairman Max Baucus, D-Mont., told colleagues gathered in an ornate room in the Capitol to seal the deal. “We must enact this legislation to get jobs in this country.”

While the agreement came faster than many on Capitol Hill expected, it didn’t arrive without moments of high drama.

At one point Wednesday, Senate Democrats enthusiastically declared to the media that an agreement had been struck _ only to discover moments later that no House members had shown up put their stamp of approval on the final details. In fact, House leaders _ whose members had voted for a substantially larger measure _ refused to acknowledge that any deal had been reached at all.

That led to a two-hour session in House Speaker Nancy Pelosi’s office where intensive efforts were made to resolve a sticking point _ the exact terms of a provision authorizing money for school renovation.

Support from three moderate Republican senators, Sens. Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania, was necessary to avoid a filibuster by Republican hard-liners in the Senate. The three, who helped shape the package approved by the Senate, said they would not support a final bill that did not reflect the more than $100 billion in spending cuts they helped slice out of the bill last week.

As a result, almost $50 billion had been slashed from the bill that passed the Senate Tuesday.

But House spending provisions involving aid to budget-strapped state governments and school construction were added during the negotiations. Both line items were important to the White House, which took on a leading role in pushing the parties to an agreement in the last 24 hours.

The expenditures were offset in the bill by eliminating a provision that would expand Medicaid benefits and the tweaking of several tax cut provisions concerning, among other things, the purchase of homes and cars.

Senate Majority Leader Harry Reid, D-Nev., declared the compromise bill an improvement. The new bill, he said, “creates more jobs than the original Senate bill and spends less than the original House bill.”

Collins, Snowe, and Specter, who were deeply involved in the final negotiations, said they would support the compromise, likely ensuring that it will have the necessary 60 votes to reach the floor of the Senate for a final vote.

“This is obviously a very difficult vote,” Specter said. “But I believe it is indispensable that strong action be taken.”

Late Wednesday, after the deal had been struck, Obama thanked “the Democrats and Republicans in Congress who came together around a hard-fought compromise that will save or create more than 3.5 million jobs and get our economy back on track.”

It was an emotional day for the more liberal members of Congress, who complained that the Democratic Party, which holds strong majorities in both chambers, had acceded to the demands of three senators from the minority.

“I think our side gave in too much in order to appease a few people,” said Sen. Tom Harkin of Iowa. He said Democrats should have dared Republicans to filibuster and “see what the public outcry” would have been. “I think the people are getting shortchanged.”

Republicans, meanwhile, complained they had been left out of the negotiations entirely, and alleged the Democrats had engaged in the same kind of “midnight deal-making” that the GOP was accused of when it was the party in power.

“After promising the American people transparency and openness, it now seems that the House Democratic leadership has broken their word and cut a backroom deal on a trillion-dollar-spending bill in the dark of night,” said Michael Steel, a spokesman for House GOP leader John Boehner, R-Ohio.

The speed of the negotiations was attributable in part to the presence of a team from the White House, which injected itself deeply in the process. The president’s chief of staff, Rahm Emanuel, met with members late Tuesday night, leading an administration lobbying team that also included Budget Director Peter Orszag, deputy budget director Rob Nabors and congressional liaison Phil Schiliro.

Orszag took part in more meetings on the Hill Wednesday.

A White House official described Emanuel, a former House member from Chicago, as the “chief architect of the White House-congressional negotiations.”

Working the phones Tuesday was Vice President Joe Biden. He concentrated on the handful of “gettable” Republican members of the Senate, the White House aide said. He would tell them, “Here’s our bottom line” and ask, “What do you need?” to support the package, the official said, speaking on condition of anonymity because he was not authorized to speak on the issue.

The compromise measure would provide $87 billion in Medicaid aid to states and $54 billion for a “state fiscal stabilization fund” to aid states facing financial pressure that could lead to cuts in jobs and services. It provides tax breaks for most working Americans of $400 for individuals and $800 for couples.

It boosts unemployment benefits by $25 a week for millions of jobless Americans and allows some to get an additional 33 weeks of benefits. It also provides new COBRA subsidies to help those who have lost their jobs keep health insurance they were receiving from their employers.

And the measure extends unemployment benefits in most states by 20 weeks and, in high unemployment states such as California by 33 weeks. It also includes measure to shield millions of taxpayers from a tax increase under the alternative minimum tax.

And it includes $4.5 billion for repair of federal buildings to increase energy efficiency using green technology.

The National Science Foundation would receive $3 billion. And $7.2 billion is appropriated to increase broadband access and usage in unserved and underserved areas of the nation. Expanding access to the Internet is seen as stimulating innovation, economic growth and job creation.

Noam N. Levey and Peter Nicholas of the Chicago Tribune’s Washington bureau contributed to this report.

(c) 2009, Chicago Tribune. Distributed by McClatchy-Tribune Information Services.