With the United States facing the most severe economic crisis since the 1930s, the Senate passed a massive stimulus plan Tuesday, valued at $838.2 billion, and House and Senate negotiators within hours began work to reconcile differences between the two chambers' versions of the legislation.
While most of the Senate bill closely tracks the House version, spending cuts negotiated to guarantee Senate passage are shaping up as flash points. The three Republican senators who voted for the bill and who helped to shape it, including $110 billion in cuts from the House bill, say they will not back a final version that restores those cuts.
Both the House and Senate will have to vote on the legislation in its final form.
Senate majority leader Harry Reid expressed optimism that most of the differences could be resolved quickly. Lawmakers have said they want to have a final bill on President Obama's desk by late this week or early next.
“We expect to have much of this down in the first 24 hours,” Senator Reid said in a briefing after the vote.
About one-third of the Senate package goes to tax relief, including a $69 billion fix to curb the reach of the alternative minimum tax and $19 billion in tax credits for home buyers in 2009.
Key elements on the spending side include $39 billion to help states avoid layoffs, especially in public education; $27 billion to extend emergency unemployment benefits; $40 billion for the development of clean energy, and $23 billion for programs to help those most hurt by the economic downturn.
The Senate bill also includes a provision to curb bonuses at companies receiving government bailout help – a move that will end up costing the Treasury $10.8 billion in lost tax revenue, according to the Congressional Budget Office.
But Reid acknowledged that the 61-to-37 vote in the Senate, including all Democrats and just three Republicans, gives the conference committee little room to maneuver. Sixty votes are needed in the Senate to move legislation to the floor, meaning it is crucial to retain GOP votes.
Sen. Arlen Specter (R) of Pennsylvania, one of the three, staked out his position early. “My support for the conference report on the stimulus package will require that the Senate compromise bill come back virtually intact including, but not limited to, overall spending, the current ratio of tax cuts to spending, and the $110 billion in cuts,” he said in a statement Monday.
“It’s got to keep to the contours of the bill that was passed here,” said Senator Snowe, after the Senate vote. “It is crucial to separate spending that is stimulus from spending that is not. We have to get it right. Expectation is high. We cannot fail.”
One big flash point will be over education spending. House Democrats bristled at the changes demanded by the Senate, especially the zeroing out of $14 billion in school construction in their version of the bill.
“Our bill creates 500,000 more jobs than the Senate bill – and more than 300,000 of those jobs come from school construction,” said Rep. George Miller (D) of California, who chairs the House Education and Labor Committee, after a party caucus meeting on Tuesday.
The education spending sets a bad precedent, said Senator Collins, who led bipartisan negotiations with Sen. Ben Nelson (D) of Nebraska for a compromise bill. “I do not support the establishment of a new federal school construction program, because school construction traditionally has been a state and local responsibility.
“There are vast sums for education in this bill,” she added. This includes $10 billion to help schools in low-income neighborhoods, $13 billion to help disabled children, $13.9 billion to raise the maximum Pell Grant for college scholarships for low-income students, as well as money in a states stabilization fund to prevent layoffs in public schools.
The bipartisan group met after the vote to firm up a joint position on the final conference bill.
“Everybody understands that Senator Snowe said that if this comes back materially altered from the top-line number or the pieces in the package, she will vote against it. And you could put me in that category, too,” said Senator Nelson.
House Democrats want to see a full negotiation over the changes on the Senate side – and say that they expect the White House to weigh in.“The Senate bill costs more and creates a half a million less jobs,” said House majority leader Steny Hoyer, in a briefing. The top line of about $800 billion set by the White House is not going to change, he said. “But within the top line there are different priorities between the House and Senate. And normally, the way that works out is you try to compromise on those priorities."
The issue of direct assistance to the states is especially important, he says, because in the current economic crisis it affects how many police officers, fire fighters, teachers, and other personnel cash-strapped states will have to lay off to close their budget gaps. The new funding allows states to “maintain quality of life in their states.”
Reid and House Speaker Nancy Pelosi met with President Obama Tuesday morning to get his guidance on conference negotiations.
“The president has been really into this – and understands the language in both the finance part of the bill and the appropriations part of the bill. In our conversations, he said we need to get this done as fast as we can,” Reid said, after the Senate vote. “We’re going to continue throughout the night, if necessary, to see what we can do to work this out.”