Key lawmakers bargain into overtime on tax

 cuts and spending in $790B stimulus bill 02-12-2009 3:05 PM
By DAVID ESPO and JULIE HIRSCHFELD DAVIS, Associated Press Writers

WASHINGTON (Associated Press) --  Reluctant to call it quits, key lawmakers bargained into overtime Thursday on the $790 billion economic stimulus legislation, dickering over tax cuts and federal spending before reaching an apparent final agreement more than 24 hours after announcing a deal.

Lingering controversy over school-modernization money, a scaled-back tax break for businesses and other issues forced a delay in final votes on the legislation. But Democratic leaders still hoped for final passage by the weekend.

Republicans, lined up to vote against the bill, piled on the scorn. "This is not the smart approach," said Sen. Mitch McConnell of Kentucky, the Republican leader. "The taxpayers of today and tomorrow will be left to clean up the mess."

President Barack Obama delivered what has become a daily call for congressional action, this time from the industrial heartland. With approval of the bill, he said in Peoria, Ill., companies "may be able to start growing again. Rather than cutting jobs, they may be able to create them again."

He spoke at Caterpillar Inc., the heavy machinery giant that has announced 22,000 layoffs but says it will rescind some of them once the stimulus passes.

At the Capitol and in an atmosphere of uncertainty, provisions were coming to light that had not been included in the original bills that passed the House or Senate _ or that differed markedly from earlier versions, or that appeared to brush up against claims of the bill's supporters that no earmarks were included.

One last-minute addition was a $3.2 billion tax break for General Motors Corp. that would allow the ailing auto giant to use current losses to claim refunds for taxes paid when times were good. GM got a $13.4 billion federal bailout late last year _ and is expected to receive more in 2009 _ and argued that without the provision, its government-financed turnaround plan could force the company to pay higher taxes.

The legislation does not mention GM specifically, but the company has been lobbying hard for the provision for months, with help from Michigan's representatives in Congress. "We wanted to make sure that the restructuring wasn't counteracted," said Rep. Sander M. Levin, D-Mich., a supporter of the provision.

It was not immediately clear why the provision had not been included in the bill that cleared the House several weeks ago.

Negotiators sweetened another tax break at the last minute, doubling to $1.6 billion a provision that would benefit businesses that buy their own debt at a discount. It was a major priority of business groups such as the U.S. Chamber of Commerce, which argued it would help firms and banks clear debt from their balance sheets and begin to hire workers and lend money to customers. The business group announced its support of the bill, despite the heavy opposition from its customary Republican allies in Congress.

Another late addition was a quadrupling to $8 billion, at the behest of Obama and Senate Majority Leader Harry Reid, D-Nev., of money to construct high-speed rail lines. Reid's office issued a statement noting that a proposed Los Angeles-to-Las Vegas rail could get a big chunk of the money.

While heavily lobbied, such provisions were largely around the edges of a bill that supporters said would save or create 3.5 million jobs, and that Obama has made a centerpiece of his economic recovery plan.

The bill includes billions of dollars for victims of the recession, in the form of increased unemployment benefits and food stamps, subsidies to defray the cost of laid-off workers who want to continue their private health insurance and expanded government-financed coverage for the poor.

Billions more would head off deep cuts in services by the states, many of which face deficits of their own because of the recession.

The bill also included Obama's signature tax cut, although on a slightly reduced scale. It will mean a $400 break for most individual workers and $800 for couples, including those who do not earn enough to pay income taxes.

Democratic leaders had originally hoped to vote on the bill on Thursday, then announced it would be Friday. There was no schedule for the Senate vote.

There was no evidence that the bill's passage was in jeopardy, although Olympia Snowe, R-Maine, whose vote is critical to Senate approval, issued a statement at midday that said she was "continuing to press for changes" that would broaden a tax break that was drafted to apply only to certain small businesses. The provision allows firms operating at a loss to claim refunds for taxes paid when times were profitable.

Snowe's office released the statement at about the same time House Speaker Nancy Pelosi, D-Calif., told a reporter that bargaining was finished.

Pelosi herself was involved in a continuing disagreement over the use of federal funds for school modernization _ the issue that caused her to withhold support from the compromise on Wednesday for more than two hours after key senators had announced it.

Due to the insistence of Senate Republican moderates, an attempt by House Democrats to create a new federal program for school construction was scrapped in final negotiations. As a compromise, about $10 billion was added to a fund that will provide funds for hard-pressed states, money that governors will be allowed to use for repairing existing schools.

But Democrats wanted assurances that the states would allocate the money according to need, rather than at a governor's sole discretion, leading to renewed negotiations.