The US House of Representatives and the Senate have reached a preliminary agreement on a downsized $789 billion economic stimulus package. Both chambers could begin voting on the final bill as early as Thursday.
REUTERS - U.S. lawmakers prepared on Thursday to pass a $789 billion stimulus package to revive the struggling economy in a victory for President Barack Obama that some warned may have costly consequences.
The new president, three weeks on the job, had wanted broad bipartisan support for the economic rescue plan but deep differences with most Republicans over the size and scope of the plan prevented him from achieving that goal.
Instead, just a handful of Republicans are expected to vote for the measure which includes tax credits for individuals and families, tens billions of dollars for infrastructure projects and aid for the growing rolls of unemployed as well as assistance for those without health care.
Government data released on Thursday showed the number of U.S. workers filing new claims for unemployment benefits eased last week but by less than expected, showing the labor market in the grip of a deep recession.
The stimulus package is split 36 percent for tax cuts and 64 percent in spending and other provisions, just below the 40/60 split Obama called for in his effort to begin pulling the economy out of the recession that started in December 2007.
The stimulus package was finalized after marathon talks between a small group of negotiators in the House of Representatives and Senate. Both chambers may vote on the final bill as early as Thursday, but the timetable could slip.
One of the criticisms of the plan is that it will cause the swollen U.S. budget deficit to grow even larger. Before factoring in the latest stimulus plan, U.S. government bond dealers estimated the 2009 deficit would top $1.6 trillion.
"Combine this new spending and the borrowing it will require, with the trillions of dollars still needed for the banking system, and we are about to test the outer limits of our national balance sheet," the Wall Street Journal said in an editorial.
"We aren't deficit scolds, but these levels are uncharted territory, especially if any economic recovery is weak because the spending doesn't stimulate," the paper said.
As part of his campaign to build support for the package, Obama will fly to Peoria, Illinois on Thursday to visit a factory owned by heavy equipment maker Caterpillar Inc, which he has said would rehire some laid-off workers if the stimulus is approved.
"We're at the doorstep of getting this plan through the Congress, but the work is not over," Obama said. "When we do, the challenge will shift to administering successfully this endeavor of enormous scope and scale."
Obama had demanded that Congress act before the end of the coming holiday weekend in the hope that the stimulus would begin to create and save up to 4 million jobs. Senators put the jobs number closer to 3.5 million under the compromise deal.
Passage of the bill in the Senate has hinged on the support of a handful of moderate Republicans and negotiators agreed to scale back some proposals to win their backing.
Three moderate Republican senators, Susan Collins, Olympia Snowe and Arlen Specter, had demanded that the negotiators pare the bill to below $800 billion before they would vote for it.
The White House agreed to narrow a tax credit for workers that would now total $400 for individuals and $800 for couples. An earlier version of the bill would have granted $500 and $1,000 respectively.
To help states facing growing budget shortfalls, the House had proposed $79 billion while the Senate had agreed to $39 billion. They compromised at $54 billion including some funds that could be used for modernizing schools.
Money for building new schools was stripped out and congressional negotiators also scaled back tax incentives aimed at boosting flagging home and automobile sales that were deemed too expensive.
Obama indicated on Wednesday that the federal government might also offer more help to struggling U.S. automakers but only if they make progress and present clear proposals next week that show they can be commercially viable.
"My goal, consistently has been to offer serious help once a plan is in place that ensures long-term viability and that we're not just kicking the can down the road," he told reporters from 16 regional newspapers. "What the nature of what that help ends up looking like, I think is going to depend on the plan."
Date created : 2009-02-12