Negotiations Intensify On Final Stimulus Plan

WASHINGTON (AP) – Negotiators for Congress and the White House have tentatively settled on a $790 billion price tag on President Barack Obama’s economic stimulus bill and have restored some the Senate cut from school repair and state aid.

After talks continued nonstop Wednesday, officials announced a formal meeting of negotiators for mid-afternoon in the Capitol as they try to get a bill to Obama’s desk for signing by week’s end.

Sen. Tom Harkin, D-Iowa, said that negotiators restored $6 billion in lost funding for school repair and modernization projects during talks Tuesday, and had also increased aid to state governments to $44 billion instead of the $39 billion approved in a compromise with a handful of Senate GOP moderates.

Obama’s “Making Work Pay” tax credit would be reduced from $500 per worker to $400, with couples eligible for an $800 credit, instead of $1,000, said a Democratic aide close to the talks. This aide spoke on condition of anonymity because the negotiations are private. Subsidies for health care coverage of the unemployed under the COBRA law were restored to 65 percent, but plans to give the unemployed coverage through Medicaid were in peril.

“We’re at the doorstep of getting this plan through Congress, but the work is not over,” Obama said during an appearance at a construction site in nearby Springfield, Va. “When we do, the challenge will shift to administering successfully this endeavor of enormous scope and scale.”

Earlier Tuesday, the Senate sailed to approval of its $838 billion economic stimulus bill, but with only three moderate Republicans signing on and then demanding the bill’s cost go down when the final version emerges from negotiations.

Negotiators initially were working with a target of about $800 billion for the final bill, lawmakers said. But GOP moderate Arlen Specter, R-Pa., said Tuesday night on MSNBC’s “Hardball” that he was insisting on a figure at around $780 billion.

Baucus had said earlier that $35.5 billion to provide a $15,000 homebuyer tax credit, approved in the Senate last week, would be cut back. There was also pressure to reduce a Senate-passed tax break for new car buyers, according to Democratic officials.

Asked about the timing of a final deal, White House press secretary Robert Gibbs on Wednesday cautiously said “I don’t want to disrupt the delicateness by laying down anything or predicting.” But he told The Associated Press that negotiators were “making good progress.”

“Time’s growing short,” said Sen. Susan Collins, R-Maine, as she walked into the latest in a series of meetings with a small group of Senate moderates whose votes are essential to passage of the bill.

Wednesday’s meeting built on a series of negotiations Tuesday in which White House Chief of Staff Rahm Emanuel and other top Obama aides met in the Capitol with Democratic leaders as well as moderate senators from both parties whose support looms as crucial for any eventual agreement.

House Democratic leaders promised to fight to restore some of $16 billion for school construction cut by the Senate. Those funds could create more than 100,000 jobs, according to Will Straw, an economist at the liberal Center for American Progress.

In another development, Obama announced Wednesday that Caterpillar’s chief executive told him the company will rehire some of the 22,000 workers it laid off last month, if the stimulus bill passes. The heavy equipment maker can be expected to benefit as highway construction funds begin to flow.

House Majority Leader Steny Hoyer, D-Md., acknowledged Wednesday that finding an agreement on differences over tax cuts and aid to states and localities will be difficult.

“We’re going to have to resolve those differences. Simply talking about what we need to do is not going to be very effective if we don’t do it,” he said in an interview on the Fox News Channel.

The moderate senators – Olympia Snowe and Susan Collins of Maine and Specter – are demanding that the final House-Senate compromise resemble the Senate measure, which devotes about 42 percent of its $838 billion in debt-financed costs to tax cuts, including Obama’s signature $500 tax credit for 95 percent of workers, with $1,000

going to couples.

The $820 billion House measure is about one-third tax cuts.

Collins said last week she won’t vote for any final bill exceeding $800 billion in spending and tax cuts. Specter warned that the Senate bill must stay “virtually intact.”

The GOP moderates also want the final bill to retain a $70 billion Senate plan to patch the alternative minimum tax, or AMT, for one year. The provision would make sure 24 million families won’t get socked with unexpected tax bills during the 2010 filing season.

The AMT was designed 40 years ago to make sure wealthy people pay at least some tax, but it is updated for inflation each year to avoid tax increases averaging $2,300 a year. Fixing the annual problems now allows lawmakers to avoid difficult battles down the road, but economists say the move won’t do much to lift the economy.

House leaders are tempering expectations that they’ll restore many of the cuts.

“You cannot allow the perfect to be the enemy of the effective and of the necessary, and we will not,” said House Speaker Nancy Pelosi, D-Calif.

While Democrats scrambled to preserve cuts to Obama priorities, Specter insisted on an enormous $10 billion increase for the National Institutes of Health, while Collins obtained $870 million for community health centers in talks last week.

By ANDREW TAYLOR, Associated Press Writer

Associated Press Special Correspondent David Espo contributed to this story.

(Copyright 2009 by The Associated Press. All Rights Reserved.)