House and Senate Democrats reached agreement on a $789 billion package which will include benefits for the unemployed to pay for COBRA health benefits
12 02 09 - 12:10
Late-night talks yield a deal
By DAVID ROGERS - Politico
Capping a remarkable march through Congress, President Barack Obama’s economic recovery bill is all but assured of passage this week, after House and Senate Democrats reached agreement Wednesday on a $789 billion package acceptable to moderate Republicans in the Senate.
The compromise followed an intense 24 hours of Capitol negotiations which stretched through Tuesday night and left staff and members exhausted. Senate Majority Leader Harry Reid (D-Nev.) first announced the deal, only to see continued skirmishing over school modernization funds. But with the blessing of House Speaker Nancy Pelosi (D-Calif.)—after a phone call to one of the Senate Republicans—the deal was back on track with the formal House-Senate negotiators meeting Wednesday evening.
“People’s spirits are high,” said Pelosi later. So is the workload still ahead.
Going into the night, clerks were still refining portions of the massive bill, which will have an extraordinary reach in health and tax policy beyond the investments in state aid and improved infrastructure. The goal is to have the measure filed Thursday, clearing the way for House and Senate passage before the Presidents’ Day recess.
Three Senate Republicans — Maine Sens. Susan Collins and Olympia Snowe and Sen. Arlen Specter of Pennsylvania — are pledged to support the package, assuring Reid of the 60-vote majority he needs to overcome budget points of order. Pelosi is firmly in control in the House, and the changes in the final talks could help her expand her margins, in fact.
The bill’s total cost and spending levels have been scaled back from the initial $819 billion House proposal, which drew no Republican support last month. It’s now expected that as many as 20 or more Republicans could break ranks to back the president, and from her comments, Pelosi is trying to win back some of the fiscal conservatives in her own party who opposed the earlier version.
Like a conductor on a train, Reid was a driving force in the long night of negotiations, and he and Pelosi, two very different personalities, worked closely to clear the last hurdles.
But the agreement may be most important as a coming of age for Obama.
To a remarkable degree, the new president had been able to skirt by until this week, promoting the competing House and Senate bills and never making public his full requests for new spending and tax breaks. That changed Tuesday when his chief of staff, Rahm Emanuel, and Budget Director, Peter Orszag, became more fully involved. To speed the process, the White House agreed to scale back Obama’s own signature “Making Work Pay” tax break to relieve the strain of payroll taxes on working families.
“Basically, it is whatever Obama wants,” said one House staffer up all night sorting through Appropriations accounts. From investments in new energy initiatives, broadband, high speed rail, and health information technology, Obama gained a foothold. Yet with continued market turmoil and a troubled economy, action was a first priority for the administration.
Senate Finance Committee Chairman Max Baucus (D-Mont.) estimated that 35 percent, or $276.1 billion, of the bill would be “pure” tax cuts. The Senate preserved its provision promising continued relief for middle- and upper-middle-income taxpayers threatened by the alternative minimum tax.
But rifle-shot Senate-passed tax breaks for new car purchasers and homebuyers were scaled back to make the numbers fit. And some business tax deductions were retooled to be available only to qualified small businesses with receipts of less than $5 million.
Most important, the administration agreed to scale back Obama’s payroll tax provision to $400 for individuals and $800 for couples — down from $500 and $1000, respectively. This was estimated to save at least $20 billion and was seen as a good faith effort to move the negotiations along.
The spending side of the ledger is estimated near $512.5 billion of which about $315.4 is discretionary appropriations.
By scaling back the bill, the White House strengthened its appeal to moderate Republicans such as Collins and won a little more latitude about where the remaining funds would be spent.
To a point, that is.
“Like any negotiation, this involved give-and-take, and if you don’t mind my saying so, that’s an understatement,” said Reid. And down to the end, one of the president’s most prized initiatives — $16 billion for public school construction — was a bone of contention for Collins, whose vote Obama needed.
Last Friday, she had successfully eliminated all such money from the Senate bill. Wednesday she agreed to allow $10 billion as part of a nearly $54 billion fiscal stabilization fund but argued that the $10 billion should not be confined to this single dedicated purpose.
This did not sit well with the House Democrats, already resentful of the Maine Republican’s veto power over the bill. The construction funds are especially sensitive in poor, often minority school districts less able to finance new schools. And because of political tensions now in his home state of South Carolina, House Majority Whip Jim Clyburn was insistent that some protection be provided so local schools — not the state — had access to the money.
The draft compromise keeps the $10 billion in the stabilization fund as proposed by Collins. But $6.6 billion would go to public schools under the Title 1 formula that is targeted more toward poor districts. The remaining $3.4 billion could be used for state higher education institutions and community colleges and distributed differently.
Pelosi said she had called Collins herself as part of the final discussions. “I would have liked it to be its own item,” Pelosi said of the initial House plan for the school construction funds. “But … the outcome that we have is a good one as well.”.
Infrastructure spending remains a major emphasis in the bill: Collins estimated that these job-generating investments — when broadly defined — total near $150 billion, of which about a third is directly related to traditional highway and transit-type spending.
Major items include $11 billion for the 21st Century energy grid; $29 billion for highways; $16.4 for transit projects and high speed rail and passenger rail grants to states; and $7.2 billion to expand broadband access.
A big emphasis is also on preserving some safety net for those thrown out of work by recent payroll cuts across the country.
At a cost of almost $20 billion, food stamp benefits would be increased by about 10 percent with the intention of phasing this out over 24 months by suspending the indexing of benefits.
An estimated $40 billion would be devoted to additional unemployment benefits. A $20.4 billion program to help the jobless preserve some health insurance for their families survives but has had to be scaled back to stay within the smaller package.
The bill provides a 60 percent subsidy to help laid-off workers meet COBRA payments to maintain employer-provided health insurance. The House had proposed 65 percent; the Senate, 50 percent.
But to stay with the scaled-back spending limits, new income limits would be imposed on who can qualify for the aid, and the program would be shortened to nine months, compared with 12 months under the House bill.
Most ticklish and costly of the health issues is how to distribute $90 billion in increased Medicaid funding over the next two years.
The Senate Finance Committee, dominated by rural interests, insisted on an across-the-board distribution in most cases; the House wanted to target the money more to urban states that have been hit hardest by rising unemployment.
House Energy and Commerce Committee Chairman Henry A. Waxman (D-Calif.) said the tentative deal calls for 65 percent of the money to be distributed according to the Senate’s more rural formula; 35 percent as the more urban House wanted.