Congress reaches agreement on economic recovery bill

By DAVID ESPO, AP Special Correspondent

WASHINGTON — Moving with lightning speed, key members of the Senate announced agreement Wednesday on a $790 billion stimulus bill to create millions of jobs, and said President Barack Obama could sign the bill within days.

But in a bewildering — if temporary — turn of events, House Speaker Nancy Pelosi and the White House withheld immediate expressions of support. A formal meeting of congressional bargainers who would need to ratify any deal was delayed.

At a news conference in the Capitol, Senate Majority Leader Harry Reid said the legislation would produce 3.5 million jobs. "More than one-third of this bill is dedicated to providing tax relief for middle-class families, cutting taxes for 95 percent of American workers," he added at a news conference where he was joined by moderates of both parties whose votes are essential for passage.

The emerging legislation includes help for victims of the recession in the form of expanded unemployment benefits, food stamps, health coverage and more, as well as billions for states that face the prospect of making deep cuts in school aid and other programs.

Another provision will mean a one-time payment of $250 for millions of beneficiaries who receive Social Security, Supplemental Security Income and veterans pensions and disability, according to officials.

The measure also preserves Obama's signature tax cut — a break for millions of lower and middle income taxpayers. Wage-earners who don't make enough to pay income taxes would get a reduction in the Social Security and Medicare taxes they pay.

The president also won money for two other administration priorities — information technology in health care, and "green jobs" to make buildings more energy-efficient and reduce the nation's reliance on foreign oil.

The bill "will be the beginning of the turnaround for the American economy," predicted Sen. Joseph Lieberman, the independent from Connecticut.

Republicans couldn't have disagreed more.

"It appears that Democrats have made a bad bill worse by reducing the tax relief for working families in order to pay for more wasteful government spending," said Rep. John Boehner of Ohio.

The events capped a frenzied 24-plus hours that began at mid-day Tuesday when the Senate approved its original version of the bill on a party-line vote of 61-37. Reid, Pelosi and White House Chief of Staff Rahm Emanuel plunged into a series of meetings designed to produce agreement in time for Obama to sign the bill by mid-month.

Pelosi was conspicuously absent from Wednesday's news conference in which members of the Senate announced the agreement. It was not clear whether she stayed away out of unhappiness or a scheduling conflict, but moments later, Reid arrived in her office, and the two talked by phone with Emanuel, according to officials who spoke on condition of anonymity.

Officials had said previously that one of the final issues to be settled was money for school modernization, a priority for Pelosi as well as Obama and one on which they differed with Collins and other moderates whose votes will be essential for final Senate approval.

There also was last-minute disagreement about a House proposal that could direct education funds to schools even if a state's governor didn't approve, they said.

Stocks moved higher in the moments after Reid stepped to the microphone just outside the Senate chamber. The Dow Jones industrials, which plunged 382 points on Tuesday, rose 51 points for the day.

Obama has been campaigning energetically for the legislation in recent days, saying it was essential to avoid turning what is already the worst economic crisis in a generation into a catastrophe.

As if to underscore the urgency, he said a few hours before the agreement was announced that machinery giant Caterpillar Inc. plans to rescind some of the 22,000 layoffs the firm recently announced — once the stimulus is signed into law.

Scaling back the bill to levels lower than either the $838 billion Senate measure or the original $820 billion House-passed measure caused grumbles among liberal Democrats, who described the cutbacks as a concession to the moderates, particularly Sen. Arlen Specter, R-Pa., who are under pressure from conservative Republicans to hold down spending.

Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said. The agreement would allow taxpayers to deduct the sales tax paid on new car purchases, but not the interest on loans for the same vehicles.

School construction was a problem apart from all others.

Sen. Tom Harkin, D-Iowa, told reporters that $6 billion would be set aside, and officials said it could be spent only on repair and modernization work, a limitation designed to appease the moderates.

But officials said House Democrats were holding out for as much as $9 billion.

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