Conflicting moves shape stimulus

WASHINGTON - This much is clear: Sometime soon, probably this month, President Obama will sign an economic stimulus plan.

However, it probably will have at least $50 billion less in spending plans than the Senate's current version does, and it probably will win a handful of Republican votes after lengthy negotiations.

Senators huddled yesterday to try to craft a plan that will get the 60 votes needed to stop a filibuster.

Republican moderates, joined by some Democrats, were looking for a way to pare the $900 billion-plus package by at least $50 billion, likely by cutting from education aid and a long list of smaller spending initiatives.

Late yesterday the Senate approved a plan sponsored by Sen. Johnny Isakson (R., Ga.) to give anyone who buys a home this year a tax credit of $15,000, or 10 percent of the price, whichever is less.

On another issue, the Senate softened a labor-backed provision requiring that only U.S.-made iron or steel be used in construction projects paid for in the bill. A move by Sen. John McCain (R., Ariz.) to delete the so-called Buy American requirement failed, 31-65.

But with Obama voicing concern about the provision, the requirement was changed to specify that U.S. international trade agreements not to be violated.

Democrats also preserved a key priority for Obama, a break of up to $1,000 for couples who pay payroll taxes but whose earnings are so low they do not pay income tax.

Sen. Olympia J. Snowe (R., Maine) met with the president and listed programs that she thought did not belong in the stimulus package. She said the president was "very amenable" to the centrists' ideas but made no commitments.

The Senate hopes to pass the bill by the end of this week, but the urge to reach final agreement is complicated by a variety of unusual and sometimes contradictory developments at the Capitol:

Obama is popular, and the stimulus is his first big initiative.

There is a bipartisan consensus that some sort of big package must be passed soon. The lawmakers get jolted almost daily by bad economic news and are likely to get more tomorrow, when January jobless numbers are released.

Members of both parties are concerned that the current Senate bill is too loaded with projects that won't do much to provide a quick economic stimulus. Education aid, they say, is a matter for states, not Washington.

At the same time, members see the package as a way to add their favored projects, which increase its cost.

The biggest hurdle Obama and congressional leaders must overcome is skepticism among members that the bill will provide real stimulus.

"We are really trying to reduce things that have less value in terms of stimulus and investment and move it into a place where we know we really need the money," said Senate Budget Committee Chairman Kent Conrad (D., N.D.).

He was among 14 Democratic senators who met late yesterday to discuss a compromise.

Yet Obama continued to defend inclusion in the package of long-range policy projects that would add few jobs in the next 18 months. "It is not merely a prescription for short-term spending," he said. "It's a strategy for long-term economic growth."

Lawmakers initially aimed to craft a $300 billion plan. With the inclusion of broad-based tax cuts, aid to states, and a long list of spending projects, it grew to $819 billion in the House and has inched over $900 billion in the Senate.

Conservative Republicans say $445 billion is enough. Their plan includes temporarily ending part of the payroll tax; lowering the bottom two income tax brackets, and giving $32 billion to aid homeowners facing foreclosure.

Gone would be aid to education and some health programs, as well as a long list of spending programs that many Republicans, as well as some Democrats, say have nothing to do with stimulus.

More likely to gain traction is a compromise being discussed by Conrad, Snowe and others. Leading the effort is Sen. Ben Nelson (D., Neb.).

Among their possible spending cuts are $445 million for computer-related expenses at the Agriculture and Energy Departments; $1 billion for medical research; and $1 billion to ease prison overcrowding.

President Obama

plans

to address Congress for the first time on Feb. 24, five weeks after his inauguration.

Obama's speech

to a joint session of the House and Senate that Tuesday will have the trappings of a State of the Union address but will not be considered one, White House officials said. His first State of the Union speech won't come

until next January.

- Associated Press