Lawmakers face stimulus negotiations with Presidents Day deadline looming

Conference negotiations are expected to begin this week as a compromise economic stimulus package costing about $820 billion is set to get a final vote in the Senate Tuesday.

While that appears almost identical to the $819 billion House-passed stimulus, there are significant differences between the two versions that could portend a difficult conference.

"The House is coming in Monday to start the conference process," Senate Majority Leader Harry Reid, D-Nev., said early Saturday. "And I say to everyone here, we are going to do our utmost to have a conference."

Democrats want to send President Obama a bill for his signature by the end of the week.

The Senate will convene Monday at 1 p.m. to continue consideration of the stimulus until 5:30 p.m., when a vote to limit debate will occur on the compromise by Sens. Ben Nelson, D-Neb., and Susan Collins, R-Maine.

Nelson and Collins led efforts to reach an accord Friday to cut about $100 billion from the nearly $940 billion stimulus package the Senate had been considering. The deal assures Democrats, who have only 58 members in the Senate, will get the 60 votes needed to pass the bill with Collins and Sens. Olympia Snowe, R-Maine, and Arlen Specter, R-Pa., likely to vote for the compromise.

A vote on final passage is expected at noon Tuesday to waive budget rules for the Nelson/Collins proposal and then pass the measure, Reid said.

The Nelson/Collins amendment would cut $83 billion from the spending piece of the stimulus. The largest cut is a $40 billion decrease in a $79 billion state fiscal stabilization fund, much of which would have gone to education. Other cuts would come from eliminating $19.5 billion for school construction and $5.8 billion for a Health and Human Services prevention and wellness program.

Likely House Democratic conferees include Appropriations Chairman David Obey, Ways and Means Committee Chairman Charles Charles Rangel, D-N.Y., Education and Labor Committee Chairman George Miller, D-Calif., Transportation and Infrastructure Committee Chairman James Oberstar, D-Minn., and House Budget Chairman John Spratt, D-S.C., according to the office Majority Leader Steny Hoyer, D-Md.

After likely Senate passage Tuesday, the two chambers will have little time to reconcile their versions. While most of the attention last week --- and the biggest Senate changes --- were focused on the appropriations title, there remain significant differences on taxes.

The biggest Senate change was addition of a one-year, $69.8 billion alternative minimum tax "patch" for 2009. Most Democrats support its inclusion, but some fiscal hawks have questioned its stimulative value, and it pushes the overall cost of the tax cuts in the Senate bill to nearly $370 billion, almost $100 billion more than the House version.

The Senate also dramatically sweetened a tax break for homebuyers, doubling the credit to $15,000 and allowing it to apply to all principal home purchases for one year, at a $35.5 billion cost.

Contrast that with the House version, which simply removes a 15-year repayment requirement for a $7,500 credit --- only for first-time buyers --- at a $2.6 billion cost. The Senate also included an $11 billion tax break for purchases of cars, light trucks and minivans; the House contains no similar provision.

Last-minute changes agreed to by Senate Finance Chairman Max Baucus, D-Mont., as part of the Senate's $105 billion budget-cutting agreement would reduce the adjusted gross income threshold for a new "Making Work Pay" credit to $70,000 for individuals and $140,000 for couples. Above those figures, the maximum $500 and $1,000 credits begin to phase out; the House has set the income thresholds at $75,000 and $150,000.

That difference might be easier to surmount than a major discrepancy in eligibility for refundable child care credits. The House has set the earnings threshold at zero, at an $18.3 billion cost. As part of Friday's agreement, the Senate bill boosts the level where the credit begins to phase in from $6,000 in wages to $8,100, a provision costing about $7.5 billion.

The Senate bill would send one-time, $300 checks to retirees, disabled veterans and recipients of Supplemental Security Income payments, the primary safety-net program for low-income elderly and disabled, at a $17 billion cost.

The House bill is limited to SSI beneficiaries, but boosts one-time payments to $450 for individuals ($630 for couples), costing $4 billion. The Senate bill would also lift the income tax for one year on the first $2,400 of unemployment benefits; the House has no similar provision.

Business tax provisions are similar in the two bills; in fact, Friday's Senate agreement probably served to bring the chambers a bit closer together. Baucus agreed to scrap an extended five-year carry-back period for companies to apply currently unusable tax credits against prior years when they had taxable income.

The House did not include the $11 billion provision, and the Senate used the savings to substitute a $2 billion acceleration of Low-Income Housing Tax Credit benefits to make the credit more attractive to investors.

The LIHTC's effectiveness, like tax credits for wind electricity production and investment in solar power equipment, has been decimated by the shrunken tax equity market as big financial institutions suffer losses. But the House bill includes a grant program to simply appropriate funds for wind and solar projects, an approach that senators are warming to.

The House bill also repeals a requirement that private contractors for government services forfeit 3 percent of payments up-front, a top priority of the U.S. Chamber of Commerce and other business groups. That costs $11 billion, however, and the Senate would simply delay the 2011 effective date by a year, at a $291 million cost.

On health spending, to cut costs Baucus agreed to a $5 billion reduction in COBRA subsidies for unemployed workers to buy health insurance. Instead of the government subsidizing 65 percent of the cost for nine months, as House and Senate initial versions would, the Senate bill cuts the subsidy to 50 percent but extends it for a year.

And even before any of Friday's changes, the Senate bill already had a Medicaid distribution formula that was more generous to rural, less-densely populated states than the House version, which had more money for states like New York and California.

After the Nelson/Collins deal was struck Friday, Republicans lashed out against it, charging it would still spend too much on initiatives that will not jump-start the economy.

"Most of us are deeply skeptical this will work," Senate Minority Leader Mitch McConnell, R-Ky., said on the floor. "It falls far short of the kind of measure that we should be passing."

And in a statement issued late Friday, House Minority Leader John Boehner, R-Ohio, said, "Like the House-passed bill, the proposed Senate bill appears to be focused overwhelmingly on slow-moving and wasteful Washington spending, rather than immediate job creation and fast-acting tax relief."

The House meets Monday at 2 p.m. for legislative business, with votes postponed until 6:30 p.m. On Tuesday, the chamber meets at 12:30 p.m. for morning hour and 2 p.m. for legislative business. On Wednesday, Thursday and Friday, the House meets at 10 a.m. for legislative business. The chamber will consider suspension bills, the omnibus public lands bill and the economic stimulus package.