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Centrist Compromise Clears Stimulus for Senate Passage

David Lightman and William Douglas

Sen. Arlen Specter, R-Pa., left, and Sen. Susan Collins, R-Maine talk to reporters on Capitol Hill in Washington, Friday, Feb. 6, 2009, as they wait for an elevator after a meeting with Senate Majority Leader Harry Reid of Nev. on the economic stimulus legislation. (AP Photo/Susan Walsh)

WASHINGTON - Senate Democrats and a handful of
moderate Republicans agreed Friday to push a revamped economic recovery
plan costing at least $780 billion, after a strong push from a White
House ratcheted up pressure on the gridlocked lawmakers.

The new plan, which the Senate could vote on as soon as Saturday, is
expected to pass. It slashed an estimated $110 billion from the
Democratic-authored bill that's been debated all week.

it was clear that Democratic measure lacked the 60 votes needed under
Senate rules to clear procedural hurdles. Democrats control 58 seats in
the 100-member body.

by Sen. Ben Nelson, D-Neb., the centrists joined with two like-minded
Republicans - Sens. Susan Collins of Maine and Arlen Specter of
Pennsylvania - and produced a package that, according to senators, cuts
$19.5 billion slated for school and higher education construction and
half of a $79 billion fund to help states with education spending.

trimmed were dozens of other programs, including Superfund, Head Start
and Early Start, energy loan guarantees and historic preservation.

plan would retain some key features from the Senate Democrats' bill. It
would spend $45.5 billion on infrastructure, including highway
projects; help fund water and sewer projects; provide $87 billion to
states for help with Medicaid; and give a $70 billion break from the
Alternative Minimum Tax, according to Sen. Collins, R-Maine.

compromise "cuts away many projects that are worthwhile projects but do
not belong in a stimulus package," she said, "because they have nothing
to do with turning our economy around and creating and saving jobs."

Democrats who backed the original bill explained that while they disliked the changes, they had little choice.

come from a state that has to build a school a week to stay even. But I
also come from a state with more people unemployed than some states
have population," said Sen. Dianne Feinstein, D-Calif.

The logjam broke as Obama got more involved.

Friday had turned up the pressure on lawmakers with some tough talk and
a new plan to make personal pitches for support. He acted as the
government reported that the nation's unemployment rate ballooned to
7.6 percent in January, and monthly job losses were the worst in 35

"These numbers demand action," the president said. "It is
inexcusable and irresponsible to get bogged down in distraction and
delay while millions of Americans are being put out of work. It is time
for Congress to act."

The compromise congealed when Democrats agreed to education cuts.

Sen. Ton Harkin, D-Iowa, was clearly annoyed at the concessions, but said he would support the bill.

something that needs to get done," he said, adding, "and we Democrats
need to remind people why these school cuts were made. We can't let up."

Still, most Republicans objected to the compromise.

are ready to support a stimulus bill. But we will not support an
aimless spending spree that masquerades as a stimulus," said Senate
Republican Leader Mitch McConnell, R-Ky.

"If this legislation was passed," added Sen. John McCain, R-Ariz., "it'd be a very bad day for America."

the largest generational theft bill in the history of mankind," said
Sen. Tom Coburn, R-Okla., emphasizing that the measure will add to the
national debt.

The agreement, reached after three days of
closed-door negotiations, was President Obama's first major legislative
test, and the White House made a hard last-minute push to get it.

House Chief of Staff Rahm Emanuel ironed out final details at a
closed-door meeting with Collins, Specter, Nelson, Democratic Leader
Harry Reid of Nevada and Independent Joseph Lieberman of Connecticut.

Emanuel then pushed the plan at what was described as a friendly 20-minute closed-door meeting of Democratic senators.

the Senate passes the bill, members from both houses of Congress are
expected to meet and craft a compromise that they hope would be ready
for final votes by the end of next week.

Obama will step up his
effort to push the process along. He's calling for millions of his
campaign supporters this weekend to gather for house parties to drum up
support - although sign-ups were quite low Friday - and Monday evening
will hold his first presidential news conference.


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The president also will begin holding town hall meetings in high-unemployment cities - a

from his earlier plans to stay in Washington. Monday he'll travel to
Elkhart, Ind., where White House press secretary Robert Gibbs said
unemployment had surged in the past year from 4.7 percent to 15.3

On Tuesday, Obama plans to travel to Fort Myers, Fla., where unemployment is 10 percent.

"I think going directly to where the problems seem even more acute (is) important to the

president and important in his effort to convince Congress to move swiftly," Gibbs said.

Obama will be trying to pressure a Democratic-led Congress that, despite all the rancor,

has largely agreed on major parts of the package.

Senate and the House of Representatives separate versions of the
legislation are close on infrastructure spending numbers. Both also
have about $5 billion to help fund public housing. Both provide a $79
state stabilization fund for education programs, as well as about $13.5
billion to fund programs for children with disabilities. And both
contain Obama's "Making Work Pay" tax break for working families, which
gives most taxpayers an effective rebate of $500.

There also are
some significant House-Senate differences, notably on housing. Senate
Democrats embraced a GOP-authored plan to give a $15,000 tax credit to
people who buy new homes, recently foreclosed homes or houses facing
foreclosure. The House bill omits this.

Sen. Johnny Isakson,
R-Ga., the chief sponsor, patterned his amendment after a tax credit
that then-President Gerald Ford pushed through for anyone who bought a
home in 1975 to help alleviate a housing crisis then.

"We have a pervasive housing problem," Isakson said, "and we have a historical precedent that works."

would it? Several housing experts agree that every little bit could
help stem foreclosures - there were 3.2 million foreclosure filings in
2008, an 81 percent increase over 2007 - and boost sluggish new housing

Analysts doubt, though, that the $15,000 tax credit is
enough to have a major impact on the underlying problems that are
crippling the housing market.

"The bigger problem is the
availability of credit," said Rick Sharga, vice president of marketing
for RealtyTrac, a real estate Web site. "It will do nothing for people
in foreclosure. We have a major problem with unemployment numbers and
the tightness of available credit in the market."

Moulton, an assistant professor at the Ohio State University's John
Glenn School for Public Affairs, said the tax credit could "stimulate
the economy generally" but wondered, given the rising unemployment rate
and difficulty in obtaining credit, who'd be able to take advantage of
the offer.

Looking at the people facing foreclosure, the problem
is the high loan-to-value they are facing," she said. "They can't get
the value out of their homes - they need to get the full value out of
their homes, and I don't know if a $15,000 credit will help."

(Margaret Talev contributed to this report.)


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Obama warns lawmakers that 'catastrophe' looms

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