Agreement reached on stimulus

WASHINGTON - House and Senate negotiators reached agreement yesterday on a stimulus plan with a price tag of nearly $790 billion after scaling down the versions separately passed by both houses, congressional leaders announced.

"The difference between the Senate and House versions we've resolved," Senate Majority Leader Harry Reid (D., Nev.) told reporters.

"The middle ground we've reached creates more jobs than the original Senate bill and spends less than the original House bill," he said.

The bill passed by the Senate on Tuesday totaled $838 billion. The House version had a price tag of $819 billion.

Reid said the compromise bill would create or save 3.5 million jobs and fulfill one of President Obama's campaign pledges, "cutting taxes for 95 percent of American workers."

He said the final bill would be put to a vote in the Senate "within the next few days," maybe as early as today.

However, House and Senate leaders had not resolved every detail as of late yesterday afternoon, and they delayed the start of a final conference committee meeting to work out differences on school-construction funding, a major bone of contention.

House Speaker Nancy Pelosi (D., Calif.), Reid's partner in negotiations over more than 24 hours, initially withheld her approval for more than two hours in the dispute over funding for school construction.

She said the delay had been worth it: "We had to make sure the investment in education" was in the bill.

Originally, Pelosi and House Democrats wanted a new program dedicated to school construction. But Sen. Susan Collins (R., Maine), who along with fellow GOP moderates Olympia J. Snowe, also of Maine, and Arlen Specter of Pennsylvania was crucial to passing the bill in the Senate, held firm against that.

In the end, the agreement added money to a State Fiscal Stabilization Fund, with the additional provision that governors may use some of the money for modernizing school buildings but not for building new ones.

"This is obviously a very difficult vote," Specter said. ". . . But I believe it is indispensable that strong action be taken." He noted that the U.S. Chamber of Commerce had "enthusiastically" endorsed the bill.

Stocks moved higher in the moments after Reid stepped to the microphone just outside the Senate chamber. The Dow Jones industrials, which had plunged 382 points Tuesday, rose 51 points for the day.

It was unclear yesterday evening how Pennsylvania and New Jersey would fare under the compromise plan.

Gov. Rendell - who relied heavily on the initial House proposal when crafting next year's state budget - faces the prospect of retooling the spending plan he presented to Pennsylvania lawmakers last week.

Rendell had relied on an estimated $79 billion set aside for states in the House package, only to find $40 billion stripped away by the Senate. On Monday Rendell warned of deep reductions in state aid to hospitals and schools and an additional 1,500 layoffs of state workers if the Senate version was the bill sent for Obama's signature.

Late yesterday, though, the total for states had inched up and Rendell remained hopeful that more would be restored during conference committee meetings last night.

As lawmakers started negotiations, the two versions of the bill were more than $1 billion apart in the amounts that could flow to New Jersey, according to House and Senate estimates - with the Senate version providing lesser amounts in education and construction aid.

Regardless of the final figures, Gov. Corzine said yesterday, moving the package was "a critical step to restoring confidence in our economy."

Obama hailed the agreement, saying the plan "will provide immediate tax relief to families and businesses, while investing in priorities like health care, education, energy and infrastructure that will grow our economy once more."

Congressional Republicans immediately denounced the agreement, reiterating complaints that the package is too expensive and will not create jobs as much as it increases the size and reach of the federal government.

In an interview on CNN, Sen. Lindsey Graham (R., S.C.) said the final bill was "not bipartisan" and would cost more than $1 trillion over the next 10 years when debt-service costs were factored in.

"This still creates more new government than it does new jobs," he said of the compromise. "This is worse than nothing."

Reid announced the deal after House and Senate negotiators, including Pelosi, met in the morning to try to iron out the final details on the huge package in advance of a formal House-Senate conference.

Collins joined Reid and other key senators in praising the final product. Pelosi was not present.

Collins said the bill contained about $150 billion for infrastructure, including transportation, environmental and broadband projects, calling this spending "the most powerful component in this bill to create jobs."

More than 35 percent of the funding goes for tax relief, Collins said.

Even after the Senate scaled down its version to $838 billion, approved by 61-37 on Tuesday, the centrists had continued to demand more reductions.

Senate aides said a target of the centrists was Obama's "Make Work Pay" tax cut of $500 a year for most individuals and $1,000 a year for most families; they pushed to pare it, respectively, to $400 and $800.

Other reductions were likely in a $15,000 tax credit for all home purchases in the next year as well as a tax credit for the purchase of new cars, both of which were added to the Senate bill after little debate.

Sen. Ben Nelson of Nebraska, who led Democratic efforts to forge a compromise bill with a handful of Republicans, indicated that he held out little hope of getting more Republicans to support the package, despite the reduction in the overall price tag.

"People who are critical are going to be critical because of 'fill in the blank,' " he said.

How much federal aid will states get?

$90 billion in increased federal matches to help pay for Medicaid, along with a $54 billion "State Fiscal Stabilization" fund.

What will be spent on infrastructure?

$150 billion, says a key author of the bill, Sen. Susan Collins (R., Maine).

How long will it take for highway projects to begin?

Highway construction groups estimate that thousands of projects can be started in 90 days.

How will infrastructure spending affect jobs?

The Federal Highway Administration has estimated that every $1 billion the federal government spends on infrastructure translates to 35,000 jobs. Going by Collins' estimate of infrastructure spending, that would mean five million jobs. Senate leaders have said the total stimulus package will sustain 3.5 million jobs.

What happened to President Obama's promised tax credit for 95 percent of workers?

Negotiators trimmed it to $400 a year from $500 - or $800 for married couples, cut from Obama's original proposal of $1,000.

Is the stimulus package big enough?

Mark Zandi, chief economist at Moody's Economy.com in West Chester, calls for a larger package of spending and tax breaks and predicts unemployment could top

9 percent next year, up from 7.6 percent now, even if an $800 billion package is enacted. Nobel laureate economist Paul Krugman also contends that $800 billion will fall short of filling the gap

left by projected

reductions in consumer and business spending.

- Associated Press

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