FEBRUARY 9, 2009
The Wall Street Journal
By GREG HITT


Senate Nears Vote on Stimulus Bill

Democrats Target Tuesday for $827 Billion Plan, but Differences With House


WASHINGTON -- Senate Democrats are confident they can push for a final vote on a revamped, $827 billion economic-stimulus package early this week, setting the stage for fresh battles as Democratic congressional leaders and the White House try to meld competing House and Senate bills.

After cutting deals Friday with three moderate Republicans to pare the cost of the package, Senate Democrats, who control the chamber with a 58-41 majority, are confident of attracting the 60 votes needed to close off debate Monday. If approved as expected, the package would go to a vote Tuesday.

The New Senate Plan

The compromise reached by Democratic leaders with moderate Republicans involves cuts to spending and tax-credit provisions in the stimulus bill before the Senate, including:

Funding to computerize health records

National study on the comparative effectiveness of health treatments

A tax break for solar and wind firms

Medicaid payments to states

A $500 payroll tax credit for people earning less than $75,000

An expansion of tax credits for low-income workers with children

Conservative Republican senators sustained their attacks on the compromise plan during an unusual Saturday session, despite President Barack Obama's calls for speedy action in the face of mounting job losses. A spokesman for Senate Majority Leader Harry Reid (D., Nev.) said Mr. Reid "remains confident that there will be votes on Tuesday to pass this urgently needed piece of legislation."

The Senate plan and the $819 billion House plan are now roughly the same size and contain similar mixes of business and individual tax cuts, including proposals to help businesses claim new tax refunds by carrying back losses into prior tax years.

The plans also provide for increasing government spending, raising funding for unemployment benefits, food assistance for the poor, and job-creating investments in bridge and highway construction, among other things.

But the House and Senate plans diverge and embody different priorities in several important areas. The Senate proposal, for example, would give $40 billion less to cash-strapped states to bolster their spending on education, including help to avoid classroom cuts, and it trims $16 billion from a House program to renovate and rebuild schools.

Rep. Chris Van Hollen (D., Md.) said classroom construction would "put people back to work." But with the White House urging speedy action, Mr. Van Hollen was careful not to dig in too deeply. "There's a lot we think in the House bill we should have in the final package," he said on "Fox News Sunday." "Having said that, we are not in the business of drawing lines in the sand, because we believe the overriding priority right now is to get something done."

The Senate embraced two costly but popular tax breaks not in the House bill. An $11.5 billion measure in the Senate package would encourage the purchase of autos by allowing buyers a write-off for local sales taxes and interest on loans. A $35.5 billion measure would create a new tax credit equal to 10% of a primary-home purchase, up to $15,000. The House bill has much smaller $2.5 billion housing provision, which would waive the repayment requirement for a $7,500 tax credit that already exists for first-time home buyers. (Please see related article on page A4.) Moreover, the Senate bill includes a $69 billion proposal to prevent the alternative minimum tax from hitting middle-income Americans.

The Senate bill scales back the eligibility for Mr. Obama's proposed payroll-tax holiday, phasing out the benefit for couples earning $140,000, not $150,000, as in the House bill. Additional tensions loom over how generous to make the child tax credit, with the House pushing to broaden the credit to reach more of the working poor.

Differences between the two plans will be resolved in a conference of House and Senate leaders. Preparations for that process have already begun. Votes on the final package could come by late this week.

Senior White House economic aide Lawrence Summers suggested that a compromise package could be pieced together rapidly, and he urged lawmakers not to focus on "the bit of difference."

Reconciling the remaining differences won't be easy. Even before negotiations have started, one influential Republican supporter of the bill, Sen. Susan Collins of Maine, is stressing her desire for the cost of the final package to be held to $800 billion. She is suggesting that her support for a final compromise package can't be taken for granted. "I made no commitments," she said.

The rush to act on the recovery package reflects deep unease about the state of the U.S. economy, and debate is also demonstrating frustration with the steps taken so far to fix it, especially the $700 billion Wall Street rescue enacted in the fall. Amid fights over spending and tax cuts, the Senate approved a series of measures that would tighten rules on how the $700 billion can be used.

—Jess Bravin contributed to this article.

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