Obama shaped stimulus by give-and-take

Richard Wolf

WASHINGTON — A $790 billion economic stimulus plan that is headed toward final approval in Congress today came together quickly this week because the Obama administration offered a detailed compromise to "make this the president's plan," White House chief of staff Rahm Emanuel said.

To persuade Democrats and Republicans to make concessions, Emanuel said the White House put "some skin in the game" by offering to trim its major tax cut. Instead of saving individuals $500 and couples $1,000 this year and next, the accord calls for $400 and $800. "I was surprised and disappointed that the big campaign issue was reduced," said House Ways and Means Committee Chairman Charles Rangel, D-N.Y.

CHART: Give-and-take resolves differences in plans

Obama also agreed to accept a $70 billion tax cut aimed at middle-class families who are threatened by the alternative minimum tax, although it lacks much stimulative effect. "It was the price for getting a deal done," Emanuel said.

All sides gave a little this week to get a lot: the most sweeping legislation ever passed to spur economic activity.

• Obama retained what House Speaker Nancy Pelosi called his "strategic vision" for the stimulus package: using an emergency package to make long-term investments in areas such as renewable energy, information technology in health care and an expansion of broadband Internet service.

• Democrats in Congress who wrote the bill, led by House Appropriations Committee Chairman Dave Obey, D-Wis., won broad assistance for the unemployed, including federal subsidies for continued health insurance and $20 billion to increase food stamp benefits.

• Moderates in the Senate — Republicans Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania, as well as Democrat Ben Nelson of Nebraska and independent Joe Lieberman of Connecticut — reduced the plan's price tag from $838 billion in the Senate and $819 billion in the House.

The stimulus plan, which Obama could sign into law as early as Monday, combines three main elements: help for the unemployed and those in need of Medicaid and food stamps; tax cuts for families and small businesses; and investments in infrastructure, energy, education and health care.

House Democrats such as Energy and Commerce Committee Chairman Henry Waxman, D-Calif., emphasized putting money in people's pockets with higher jobless, health insurance and food stamp benefits. In the Senate, where moderates had to be satisfied or the deal would fail, more tax cuts were added.

Obama's landmark piece of the puzzle was the future investments — not just traditional, such as highways and bridges, but 21st-century variety, such as wiring homes to the Internet and computerizing medical records.

"The parameters from the outset were from Pennsylvania Avenue," said Rep. John Larson, D-Conn., who chairs the House Democratic Caucus.

Emanuel — Larson's predecessor as caucus chairman before Obama picked him to be chief of staff — said the strategy was to let the House and Senate act before swooping in with a compromise plan. After support for the package lagged last week, the White House sent in their best weapon: Obama. He went on the road to Indiana, Florida, Virginia and Illinois to tout the need for the plan.

As late as Wednesday, there were still hang-ups. Senate Republicans led by Collins of Maine had insisted on removing $20 billion for school construction. Pelosi wanted it back. That required one more compromise: $10 billion was added to a pot of money going to states, with the understanding that it could be used to fix crumbling schools.

More than anything, what drove the deal was the imperative to do something, anything, to improve the worst economy since the Great Depression. Senate Finance Committee Chairman Max Baucus, D-Mont., called the loss of 3.6 million jobs "regrettable arithmetic."

The sense of urgency came loudest from Obama, who warned of a possible catastrophe. "One thing we heard repeatedly," Larson said, "was 'act.' "

Give-and-take resolves differences in plans

The White House and congressional leaders agreed Wednesday on a two-year, $790 billion economic stimulus plan. Here's how some of the differences between the House and Senate bills were resolved:

Provisions Details Context

Total tax cuts $282 billion in total tax cuts, about 35% of the compromise bill Slightly more than the House bill

"Making Work Pay" tax credit Individuals would get $400, families $800 in 2009 and 2010 $100 less per individual and $200 less per couple than proposed in both bills, saving about $30 billion

Alternative Minimum Tax fix $70 billion for a tax break to protect 24 million families from higher AMT The final bill retains this Senate provision, not in the House bill

Social Security One-time $250 payment to recipients of Social Security, Supplemental Security Income and veterans pensions and disability Less than what was contained in the Senate and House bills, but it provides money to more recipients

Home buyer tax credit A new $8,000 tax credit for buyers of new or existing homes Down from $15,000 added in the Senate

New car sales tax deduction Allows taxpayers to deduct the sales tax paid on new car purchases Removes Senate provision to make interest on auto loans deductible

Transportation infrastructure $50 billion for highways, bridges, mass transit, high-speed rail and airports Slightly more than the amount proposed in each bill

Education, other aid for states $54 billion in aid for states; $10 billion can go to modernize schools House bill was $79 billion; Senate bill was $39 billion

Energy assistance About $50 billion, including $11 billion for electricity grid, $5 billion to insulate homes and $5 billion to fix federal buildings Retained most of the funding sought by President Obama for future investments

Broadband Internet service $7 billion to expand broadband service, particularly to rural areas Another Obama priority retained in both the House and Senate bills

Sources: The Associated Press and USA TODAY research