Senate cuts a stimulus deal

An economic recovery package should pass the Senate within a few days, after moderates from both parties joined together to cut billions from the proposal.

By Mike Madden

Published February 7, 2009 1:10AM (EST)

WASHINGTON -- It took a while longer than President Obama wanted, but the Senate finally figured out how to push a massive economic stimulus bill along to the next step.

After hours of negotiations yesterday and today, a handful of moderates from both parties hashed out a deal that puts the overall price tag of the Senate's stimulus bill in the low $800 billion range. To get there, they cut $86 billion in spending and $18 billion in tax cuts, and proposed other adjustments that should mean about 80 percent of the money in the bill is spent in the next two years. (Technically, the cuts amount to $104 billion, but the Senate has already added billions in new spending to the bill while debating it, offsetting some of the cuts.)

"We're now closer to joining President Obama in helping the economy turn around," Senate Majority Leader Harry Reid, D-Nev., said, announcing on the floor that the deal had been reached, after an hour-long Democratic caucus meeting that White House Chief of Staff Rahm Emanuel joined.

The negotiations were needed to secure a handful of Republican votes -- possibly only those of Susan Collins and Olympia Snowe, of Maine, and Arlen Specter of Pennsylvania. GOP conservatives opposed the bill vehemently. Democrats -- pushed by the White House, which wanted to see quick action -- decided to cut a deal that would get them 60 votes, making a filibuster impossible, instead of letting the debate slide into prolonged political theater. Nebraska Democrat Ben Nelson and Connecticut's apostate Democrat, Joe Lieberman, took the lead in negotiating for the Democrats; Reid thanked Lieberman specifically tonight. (Lieberman sounded pleased with himself for joining in. "A gang was formed," he said, referring to the moderates, whom Nelson had dubbed the Jobs Gang. "As a teenager, I never had the chance to join a gang.")

A vote hadn't been scheduled yet by early Friday night; conservatives sounded ready to block things from moving too fast, and the final action might not come until Sunday or Monday. Whenever it happens, it's going to be close -- so close, in fact, that Ted Kennedy is prepared to vote if Democrats need him to get to 60 votes. New Hampshire Republican Judd Gregg, whom Obama nominated as commerce secretary earlier this week, has said he won't vote, cutting the margin for error even further.

The cuts mostly took out programs that the moderates argued should be funded through regular spending legislation -- most of which still isn't finished for the federal fiscal year that began in October -- instead of through an emergency stimulus bill. Billions of dollars for new school construction were removed, according to notes taken by Democrats during their meeting, and other education aid to state governments was cut from the original draft. But $14 billion in Pell grants for higher education were still in the proposal, as were $87 billion in temporary increases in Medicaid spending.

Government statistics released this morning underscored the need for action -- unemployment rose, in January, to 7.6 percent, the highest rate since 1992. Nearly 600,000 jobs were lost last month, the most in a single month since 1974. Obama has also started pushing harder for the bill; the White House announced today he would visit Indiana and Florida early next week to give speeches designed to rally support for the plan.

Mike Madden

Mike Madden is Salon's Washington correspondent. A complete listing of his articles is here. Follow him on Twitter here.

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