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Deal Struck on Stimulus Bill


After a day of jawboning from President Barack Obama and behind-the-scenes negotiating to gain Republican support, the Senate on Feb. 6 crafted a compromise stimulus spending bill and began debating the changes Friday night. A vote was expected sometime over the weekend.

CNN and the Associated Press both reported that the new stimulus spending plan would be $780 billion, down from $937 billion. Senate Majority Leader Harry Reid (D-Nev.) took to the Senate floor at about 7 p.m. to open debate on the package.

The compromise came on a day when the government reported another 598,000 unemployed in January and an unemployment rate of 7.6%—economic statistics that Democrats used to heighten the sense of urgency behind passing the plan. Along with tough words from Obama on the need for the stimulus plan, White House Chief of Staff Rahm Emanuel was dispatched to the Capitol to help craft revisions to the stimulus package that would satisfy Democrats and moderate Republicans.

60 Votes Needed to Pass

Emanuel met with Republican Senators Susan Collins of Maine and Arlen Specter of Pennsylvania, who along with Democrat Ben Nelson of Nebraska and Independent Joseph Lieberman of Connecticut were the main negotiators on the compromise. Republicans had argued that the stimulus bill was too large and included provisions that wouldn't produce jobs quickly.

Democrats have a 58-41 majority in the Senate, but because of procedural issues 60 votes are needed to pass the stimulus package. Only 57 Democrats have been voting because of the illness of Senator Edward Kennedy of Massachusetts. There were reports last night Kennedy would return to Washington if needed to cast a vote.

Even after the reductions are negotiated, the stimulus plan would still provide tax cuts for individuals and business, aid to cash-strapped states, and billions of dollars in new spending to boost support for jobless benefits, food aid for the poor, and road and bridge construction.

Situation Is "Serious"

Obama, who pushed for the stimulus package during a televised speech to House Democrats on Feb. 5, took up the theme again Friday morning in remarks made during appointment of an Economic Recovery Advisory Board. Noting the unemployment report, Obama said: "I am sure that at the other end of Pennsylvania Avenue, members of the Senate are reading these same numbers this morning. I hope they share my sense of urgency and draw the same, unmistakable conclusion: The situation could not be more serious."

Obama added: "The bill before Congress isn't perfect, but it is absolutely necessary. We will continue to refine it and improve it. There may be provisions in the bill that need to be left out and some that need to be added. But broadly speaking, it is the right size."

While the negotiations were conducted behind closed doors, public debate over the bill continued. "While we dither, Rome burns," Senator Dianne Feinstein (D-Calif.) said, noting that the number of unemployed in her state was greater than the total population of other states.

McCain Not a Supporter

As some Republicans leaned toward compromise, their former Presidential candidate, Senator John McCain (R-Ariz.), railed against the bill. "We want to stimulate the economy, not mortgage the future of our children and grandchildren by the kind of fiscally profligate spending embodied in this legislation," said McCain, who emerged as a chief Republican opponent of the proposal.

On Jan. 28, the House of Representatives passed a different version of the stimulus bill, totaling $819 billion. That bill passed without any Republican votes. The stimulus plan must still be reconciled in conference and the revised bill passed by both houses of Congress. Obama hopes to sign a stimulus bill by Feb. 16.

Mintz is is news editor for BusinessWeek.com in New York. BusinessWeek staff writer Moira Herbst contributed to this report, which was supplemented by reports from the Associated Press.


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