US Senators reach deal on stimulus bill, voting set for next week

The deal, slashed by more than $100 billion from earlier estimates to win a few Republican votes, will give the new President Barack Obama an important but narrow victory.

Michigan's Democrat Sens. Carl Levin and Debbie Stabenow said about $20 billion of the reductions had come from money set aside for school construction.

They said billions of dollars more in aid to help states deal with their own budgetary issues was cut.

Still, the agreement could clear the path to a Senate vote, which would allow it to begin negotiating a final stimulus package with the House next week.

Senate Majority Leader Harry Reid, a Nevada Democrat, scheduled a key procedural vote for Feb. 9 after a dispute over the measure’s size was resolved yesterday. If the procedural hurdle is cleared, Reid said a vote on the bill would take place on Feb. 10.

If it passes, lawmakers will attempt to reconcile the Senate bill with an $819 billion stimulus bill the House approved last month. Democratic congressional leaders are pushing to deliver a final bill to Obama by the end of next week.

WHITE HOUSE PLEASED

"We are pleased the process is moving forward and we are closer to getting Americans a plan to create millions of jobs and get people back to work," said White House spokesman Robert Gibbs.

With the United States in the grip of the worst economic crisis in more than 70 years -- a report on Friday showed nearly 600,000 jobs were lost in January -- Obama has demanded that a bill be put on his desk by February 16.

The president may well get the bill by then, but the legislative victory would be tempered by the fact that he will likely muster only a few Republican votes.

After five days of negotiations, Democrats agreed to cut tens of billions of dollars to their earlier $937 billion proposal to trim what critics, mostly Republicans, called billions of dollars in unwarranted spending.

Throughout this week, a bipartisan group of more than a dozen lawmakers has been demanding cuts to the bill as its size grew to more than $900 billion.

Senator Ben Nelson, a Nebraska Democrat who led the push to reduce that total, said after yesterday’s accord was reached that he and other lawmakers worked “line by line, dollar by dollar” to cut more than $100 billion.

The plan they produced is “about jobs, jobs, jobs,” he said.

The $780 billion compromise plan that Nelson and the other lawmakers announced did not include the cost of other changes that had been made to the bill earlier this week. Those amendments included tax cuts aimed at boosting the housing and auto industries.

Republicans estimated the bill’s cost would total about $827 billion, while the Senate’s top Republican, Mitch McConnell of Kentucky, said most of his colleagues continue to oppose the bill because, in their view, it emphasizes government spending over tax cuts.

SPENDING LOTS, FAST

While a deal on the measures marks a solid start for Obama, who took office on January 20, the largely party-line support in the House and Senate was a setback in his drive to foster a new spirit of bipartisan cooperation in Washington.

Opponents complained much of the new spending amounted to little more than a liberal wish list, and more should have been devoted to tax relief and job-creating construction projects instead of new rounds of other government spending.

Some of the biggest cuts in the Senate compromise were $40 billion in aid to states, $16 billion for school construction, and $5.8 billion for public health efforts.

Obama had said he could accept a package in the $800 billion range and that failure to act could turn crisis into catastrophe. He rejected demands for wholesale changes by Republicans, saying it was their policies that created the crisis in the first place.

Details of the administration's other major initiative to address the crisis -- how it will spend the remaining $350 billion of a bank rescue program agreed to under former President George W. Bush -- are due to be announced on Monday.

A source with knowledge of the plan told Reuters the measure would offer to insure some distressed assets held by banks, authorize the government to purchase others and spend up to $100 billion to buy and modify troubled homeowner mortgages.

Senators late on Friday agreed to an amendment directing the U.S. Treasury Department to spend at least $50 billion of the fund on home foreclosure mitigation efforts.