By David Clarke and Paul M. Krawzak CQ Staff
Published: 02-05-09
Senate Democratic leaders hope to finish work on an economic stimulus bill Thursday as moderates from both parties push for spending cuts in the package arguing that they are the best way to secure a bipartisan vote.
Ben Nelson D-Neb. and Susan Collins R-Maine are leading the moderates’ effort even as the Senate added billions more in spending provisions and tax cuts Wednesday evening including a major expansion of a tax credit for homebuyers.
Both lawmakers met individually with President Obama earlier in the day as he again urged quick passage of the legislation warning that any delay could have dire consequences for the economy.
The bill (HR 1) before the Senate would cost more than $900 billion and members of both parties are questioning whether some of the spending should be removed and considered as part of the regular appropriations process instead of being tucked into the emergency stimulus bill.
“I want it to be a package that does not contain extraneous spending that may be worthwhile if it goes through the regular appropriations process but does not meet the test of helping to boost our economy or help to create or save jobs” Collins said. Sen. Olympia J. Snowe R-Maine also met with Obama Wednesday to express her concern with the overall size of the bill.
Both Collins and Nelson said Obama was receptive to some of their critiques. But Collins said the president told her he was concerned that if too much is cut the package will be too small to have the needed impact on the economy. Collins said she would like to see the package cost about $650 billion a number Obama told her was too low.
“His concern is that the package be robust enough and large enough to give a real jolt to the economy” Collins said.
Both senators said they are discussing what funding to cut with about 10 Democrats and 10 Republicans. The proposal could be ready by Thursday.
Nelson and Collins declined to say what they want removed from the bill. But Nelson said his bottom line for cuts would be a lot more than $30 billion. Earlier Wednesday his office put that figure at more than $50 billion.
The senators said that Obama has assigned Lawrence H. Summers director of the White House National Economic Council and White House budget director Peter R. Orszag to work with them on what funding can be cut.
Afer another long day of debating and voting on amendments most of them offered by Republicans Senate Majority Leader Harry Reid D-Nev. said that he wants the Senate to pass the bill Thursday and that Democrats are willing to agree to a 60-vote requirement for passage meaning the bill would need at least some Republican support to pass.
He added that Democrats want to hold a formal conference with the House which passed its version of the bill Jan. 28. But Democrats may abandon that plan to meet their goal of getting the bill done by the Presidents Day recess.
“To do all that to jump though all those hurdles is very difficult” Reid said.
Minority Leader Mitch McConnell R Ky. said the amendment process a key GOP concern was well handled.
“I think we can discuss some time during the day tomorrow what the end game may be on this legislation” McConnell said Wednesday.
Focus on Housing
Republicans spent much of the day criticizing the overall cost of the bill while also saying it does not do nearly enough to address the problems facing the housing market which many experts say remains a major drag on the overall economy.
On Wednesday night however the Senate adopted by voice vote a proposal from Sen. Johnny Isakson R-Ga. that would create a $15000 tax credit for homebuyers twice the size of one enacted last summer and extend eligibility to all people who buy homes within a year of the bill’s enactment not just first-time buyers. It would cost about $18.5 billion.
On Thursday the Senate is slated to debate an amendment from John Ensign R-Nev. that would have the government guarantee a 30-year interest rate of 4 percent to 4.5 percent for refinanced mortgages of $750000 or less. Ensign argued his proposal would put more money in homeowners’ pockets. “It’s like a permanent tax cut” he said.
On another hot-button issue the Senate rejected 31-65 a proposal by John McCain R-Ariz. to strip language specifying that only U.S.-made iron and steel can be used in public works funded by the bill with certain exceptions such as when the domestic material is not available in sufficient quantity or quality or would drive a project’s price up more than 25 percent.
The provision would also require that only U.S.-made “manufactured goods” be used in projects funded by the bill.
In response to critics of the “Buy American” provision who argue that it could violate free-trade agreements the Senate adopted by voice vote an amendment from Byron L. Dorgan D-N.D. that would require that the rules be “applied in a manner consistent with United States obligations under international agreements.” Dorgan argued that that would prevent the provision from violating international agreements or starting a trade war.
But McCain said the clarification would do nothing to address the concerns of free-traders.
“It is impossible to say that the section would be applied in a manner consistent with the United States’ obligations under international agreements and then say that anything that’s manufactured in the United States whether iron steel or manufactured goods will have to be subject to ‘Buy America’ ” McCain said.
Some business groups have complained the provision will hurt parts of the economy that depend on free trade. The Emergency Committee for American Trade sent a letter to Obama on Wednesday that was signed by more than 125 companies urging the provision be removed.
Scramble Is On
The schedule is tight to meet the Presidents Day recess deadline. But House Speaker Nancy Pelosi D-Calif. said Democrats still believe it is possible. Adding to the pressure was the Wednesday disclosure that Obama intends to address a joint session of Congress on Feb. 24 a week after the holiday.
A House Democratic aide said pre-conference negotiations have yet to really begin because the Senate package continues to be amended and could go through major changes in order to secure votes in that chamber.
The White House is expected to be deeply involved in the conference negotiations as it tries to broker deals between House and Senate Democrats and mollify enough Republicans to get the bill back through the upper chamber.
Republicans continue to portray the bill as a bloated vessel of long-sought Democratic priorities.
“This bill needs to be pared down” McConnell said. “This is a permanent spending bill that’s been slipped into a bill that was supposed to be timely temporary and targeted.”
Congressional Democrats and Obama have pushed back arguing the goal of the legislation is not merely to give a short-term boost to the economy but to lay the groundwork for future growth.
“No plan is perfect and we should work to make it stronger” Obama said. “But let’s not make the perfect the enemy of the essential. Let’s show people all over our country who are looking for leadership in this difficult time that we are equal to the task.”
Attempts by Senate conservatives to dramatically alter the plan’s thrust failed.
An amendment by Jim DeMint R-S.C. that would prevent an increase in taxes scheduled in 2011 reduce the top business tax rate from 35 percent to 25 percent and make other tax cuts that he said would create 18 million jobs over 10 years fell when a motion to waive the Budget Act was defeated 36-61.
Similarly an amendment by John Thune R-S.D. to ensure that the bill is not used to expand the scope of the federal government by adding new spending programs was rejected 35-62.
Still Republicans expressed confidence that based on polls and constituent comments support for the Democratic plan is shrinking.
“Every day support has been declining” DeMint said.
Thune said that while he does not speak for the leadership he would be “inclined” to use procedural obstacles to try to derail the bill unless major changes are made.
On Wednesday night the Senate also adopted the following amendments:
• A proposal by Benjamin L. Cardin D-Md. that would increase the limits on a Small Business Administration bond program effectively allowing small businesses to compete for larger contracts.
• A proposal to provide $2 billion to the states for affordable housing. Christopher S. Bond R-Mo. who offered the amendment said the money would go for “shovel-ready projects” that have been stalled by the credit crisis. “There will be tens of thousands of new housing units and tens of thousands of new jobs” Bond said.
Joseph J. Schatz contributed to this story.
