US Senate approves $838 billion stimulus bill, opens urgent final talks

Within hours of the 61-37 Senate vote, White House Chief of Staff Rahm Emanuel, Budget Director Peter Orszag and other top aides to President Barack Obama met in the Capitol with Democratic leaders as well as moderate senators from both parties whose support looms as crucial for any eventual agreement.

 

A top priority for Obama is to restore money to build and repair infrastructure and to give cash-starved states more help with their budget problems. Almost $60 billion for those two programs alone was cut at the insistence of Republican moderates last week in a bargain that was crucial to getting their votes.

 

The moderates, Olympia Snowe and Susan Collins of Maine and Arlen Specter of Pennsylvania, are demanding that the final bill resemble the Senate measure, which devotes about 42 percent of its $838 billion in debt-financed costs to tax cuts, including Obama’s signature $500 tax credit for 95 percent of workers, with $1,000 going to couples. Â

 

The $820 billion measure passed by the House of Representatives is about one-third tax cuts.

 

The Republican moderates also want the final bill to retain a $70 billion Senate plan to "patch" the alternative minimum tax, or AMT, for one year. The provision would make sure 24 million families will not be slammed with unexpected tax bills more than a year from now during the 2010 filing season.

 

The AMT was designed 40 years ago to make sure wealthy people were unable to use loopholes in the law to avoid paying taxes, but it has been updated for inflation each year to avoid tax increases averaging $2,300 a year. Fixing the annual problems now allows lawmakers to avoid difficult battles down the road, but economists say the move will do little to lift the economy.

 

Obama and his Democratic allies go into final negotiations on the economic rescue package with limited ability to make it more to their liking after the moderate Republicans - with support from conservative Democrats such as Ben Nelson of Nebraska - wrung savings totaling $108 billion in spending from the measure.

The Senate moderates are essential if the final plan is going to pass and get to Obama’s desk, so they are playing sticking with their demands.

 

"My support for the conference report on the stimulus package will require that the Senate compromise bill come back virtually intact," Specter warned in a statement.

 

House Democratic leaders promised to fight to restore the school construction money. Those funds could create more than 100,000 jobs, according to Will Straw, an economist at the liberal Center for American Progress. He said the $40 billion cut in aid to state governments would mean 183,000 fewer jobs would be created under the plan.

 

The Senate has a well-earned reputation for emerging the winner in most House-Senate negotiations, since its rules make passing bills more difficult and typically require bipartisan votes. Senators tell the House leaders it is difficult to pass anything through the Senate that departs from carefully wrought agreements.

 

Hence the likelihood the final measure will greatly resemble the Senate bill.

 

"I think they’ve got a lot of influence on the outcome," said Democratic Sen. Kent Conrad. "It has to do with the simple reality of getting the votes to pass. And whether somebody likes it or doesn’t like it, there’s a thing called reality."