WASHINGTON--House of Representatives 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, U.S. Sen. Harry Reid (Dem., Nev.), 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 Barack Obama to sign the bill by Monday.
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,” President Obama said, “for moving it along with the urgency that this moment demands.”
The deal reflected a calculated gamble by President 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 President 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 President 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 (Dem., Calif.) 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.
Mrs. 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 underway 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.
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 Speaker 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.
But even before the last touches were put to the bill, some angry Democrats said that President Obama and congressional leaders had been too quick to give up on Democratic priorities.
“I am not happy with it,” said U.S. Sen. Tom Harkin (Dem., 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.”
Sen. 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.
