Congress, Obama compromise on stimulus plan

WASHINGTON -- The Democratic-controlled Congress and White House agreed Wednesday on a compromise $790 billion economic stimulus bill designed to create millions of jobs in a nation reeling from recession. President Obama could sign the measure within days.

"More than one-third of this bill is dedicated to providing tax relief for middle-class families, cutting taxes for 95 percent of American workers," said Senate Majority Leader Harry Reid at a Capitol news conference where he was joined by moderates from both parties whose support is essential for the legislation's final passage.

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 a dispute over federal 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.

Obama, who campaigned for the measure, welcomed the agreement in a written statement that said it would "save or create more than 3.5 million jobs and get our economy back on track."

The legislation is at the core of Obama's economic recovery program and includes help for victims of the recession in the form of expanded unemployment benefits, food stamps, health coverage and more, as well as billions for states that face the prospect of making deep cuts in school aid and other programs.

Another provision will mean a one-time payment of $250 for millions of beneficiaries who receive Social Security, Supplemental Security Income and veterans pensions and disability, according to officials.

The measure also preserves Obama's tax cut -- a break for millions of lower and middle income taxpayers. Wage-earners who don't make enough to pay income taxes would get a reduction in the Social Security and Medicare taxes they pay.

The president also won money for two other administration priorities -- information technology in health care and "green jobs" to make buildings more energy-efficient and reduce the nation's reliance on foreign oil.

The bill "will be the beginning of the turnaround for the American economy," predicted Sen. Joseph Lieb¿erman, an independent from Connecticut.

'Made a bad bill worse'

Republicans disagreed.

"It appears that Democrats have made a bad bill worse by reducing the tax relief for working families in order to pay for more wasteful government spending," said Rep. John Boehner of Ohio.

The events capped 24-plus hours that began at midday Tuesday when the Senate approved its original version of the bill on a largely party-line vote of 61-37. Reid, Pelosi and White House chief of staff Rahm Emanuel plunged into a series of meetings designed to produce agreement in time for Obama to sign the bill by midmonth.

Obama has been contending daily that the plan is essential to avoid turning what is already the worst economic crisis in a generation into a catastrophe.

As if to underscore the urgency, he said a few hours before the agreement was announced that machinery giant Caterpillar Inc. plans to rescind some of the 22,000 layoffs the firm recently announced -- once the stimulus is signed into law.

Support in poll

A new USA Today-Gallup poll put backing of the plan at 59 percent this week, up from 52 percent in early January.

Scaling back the bill to levels lower than either the $838 billion Senate measure or the original $820 billion House-passed measure caused grumbles among liberal Democrats, who described the cutbacks as a concession to moderates, particularly Sen. Arlen Specter, R-Pa., who are under pressure from conservative Republicans to hold down spending.

Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, officials said. The agreement would allow taxpayers to deduct the sales tax paid on new car purchases but not the interest on loans for the same vehicles.