Negotiations in High Gear After Senate Passes Stimulus Bill

After the Senate voted 61-37 Tuesday afternoon to approve its $838 billion version of President Obama’s economic stimulus bill, House-Senate negotiations were immediately underway — stretching late into Tuesday night — and there now appears to be a deal in the works to finalize the legislation. Negotiators are expected to emerge from closed-door meetings later Wednesday and gather in a public session to sign off on a compromise bill, tentatively holding a price tag of $790 billion, that would then be sent to the full House and Senate for final approval. At the outset, it appeared the final bill would be close to $800 billion. But Arlen Specter (R-Pa.) said Tuesday night on MSNBC’s “Hardball” that he was adamant on a figure closer to $780 billion — which might be the case. Nonetheless Democratic aides said that Obama’s negotiating team had succeeded Tuesday in reinstating some funds for school construction projects and increasing aid to state governments, as almost $60 billion was slashed from those two programs alone, in efforts to gain approval from GOP moderates last week. Under the finalized plan, Sen. Max Baucus (D-Mont.) has said that the $35.5 billion to provide a $15,000 homebuyer tax credit, approved in the Senate last week, would likely be cut back. And a Democratic aid close to the talks told Yahoo News that Obama’s “Making Work Pay” tax credit would also be reduced from $500 per worker to $400, with couples eligible for an $800 credit, instead of $1,000. A stipulation capping compensation for top executives of companies that receive government aid appeared likely to be dropped altogether because of an unanticipated $11 billion budget cost, officials told The Dallas Morning News on condition of anonymity. The three moderate Republicans who voted for the Senate’s measure – Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania – are demanding that the final bill resemble the Senate’s version of the bill, which allocates about 42 percent of its $838 billion in debt-financed costs to tax cuts, unlike the $819 billion House measure that devotes about one-third to tax cuts. “We’ve got a little more work to do over the next couple of days,” Obama said Tuesday during his announcement that the Senate passed the bill. “But it’s a good start.” White House press secretary Robert Gibbs was asked Wednesday morning about the timing of the final bill. He 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.” Congressional leaders have said that they want the bill on Obama’s desk by Monday, and Pelosi has said Congress will not leave for a scheduled recess next week unless the bill is completed. Write to Kelly Curran at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.