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House-Senate talks shrink stimulus bill
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WASHINGTON – Lawmakers who are negotiating a final compromise on the economic stimulus package tentatively agreed Wednesday on a $789.5 billion price tag and are seriously considering scaling back tax breaks for new car and home buyers while restoring some cuts in state education aid and health care.
The total cost would be well below the measures that the Senate and House of
Representatives passed.
The negotiators’ view is that as long as the cost stays at or below $800 billion, they’d be able to attract some moderate Republican votes – crucial to Senate passage – even as some of the Republicans’ favorite tax cuts are trimmed.
The House-Senate negotiators met late Tuesday and planned to resume meeting
Wednesday afternoon.
White House Chief of Staff Rahm Emanuel and Budget Director Peter Orszag have been involved in the discussions. They and House Democratic leaders have been adamant that school funding cuts be restored.
The House approved a $79 billion State Fiscal Stabilization Fund on Jan. 28 to help states with education costs, as well as $20 billion for school construction. The Senate cut the fund to $39 billion and provided no money for construction.
Some, but not all, of this money is likely to be restored, according to people close to the negotiations who couldn’t be identified because they weren’t authorized to speak publicly.
In addition, the negotiators are expected to increase the subsidy for unemployed workers under the COBRA health-care program. The House approved a 65 percent subsidy, while the Senate put it at 50 percent.
Money would be saved in the bill by reducing tax breaks. One insider said that President Barack Obama’s “Making Work Pay” tax credit, which effectively would rebate $500 to 95 percent of taxpayers, could be cut back slightly.
More likely to be reduced is the homeowners’ tax credit that the Senate adopted last week. The $15,000 credit, or 10 percent of the purchase price of a home, whichever is less, would cost the Treasury about $35 billion.
Also being eyed for a cut is the $11 billion tax break for new car buyers that the Senate adopted last week.
Such cuts, the sources said, would most anger Republicans, but most of them won’t vote for the bill anyway. The three Republican senators whose support of the Senate bill was crucial to getting the 60 votes necessary for passage under Senate rules are more concerned that the overall cost be capped around $800 billion than they are wed to specific tax breaks. Those three are the two Republican senators from Maine – Olympia Snowe and Susan Collins – and Arlen Specter of Pennsylvania.
It’s not yet clear what other cuts may be needed to get the package below $800 billion. The House version was $819 billion, the Senate’s $838 billion.
There’s general agreement on a number of items, notably money to rebuild roads and bridges, about $87 billion to help states provide health care for poor people and those with disabilities, and a 20- to 33-week extension of unemployment benefits.
Also likely to remain in the bill is a $70 billion fix to the alternative minimum tax.
DAVID LIGHTMAN
McClatchy Newspapers
