House approves stimulus plan; Senate vote next

WASHINGTON (Reuters) - The U.S. House of Representatives approved a $787 billion package of spending and tax cuts on Friday aimed at rescuing the struggling economy and the Senate was expected to pass the measure by late evening.

Democrats wielded their majority to push one of the largest spending bills in U.S. history through the House by a vote of 246-183 and edge President Barack Obama closer to an early political victory.

The Senate was expected to start voting at 5:30 p.m. (2230 GMT). Democrats control 58 of the 100 Senate seats and are expected to get at least the two more votes needed to pass the stimulus package and send it to Obama for his signature.

But the vote was not expected to conclude until around 10:30 p.m. (0330 GMT Saturday) when Ohio Democratic Senator Sherrod Brown is due to arrive back in Washington to cast the 60th vote after attending services for his late mother.

No House Republicans backed the stimulus measure, arguing it had too much spending and not enough tax breaks. That dashed Obama’s quest for bipartisan support he had sought and had hoped would break the gridlock that has gripped Congress for years.

The final plan is split into 36 percent for tax cuts and 64 percent in spending and other provisions. That was close to the 40/60 split Obama had sought in his effort to jolt the economy, which he has warned could become a “catastrophe” without rapid government intervention.

House Majority Leader Steny Hoyer chastised Republicans, saying they were sticking to the same economic precepts that had proved a failure during the eight-year tenure of Republican President George W. Bush.

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“Millions and millions of Americans will receive a tax cut” under the measure, he said, adding that “millions and millions of people ... who have lost their jobs and can’t put food on the tables of their families will be helped by this bill.”

Representative Mike Pence, a member of the Republican leadership, countered during the closing floor debate, “The only thing the Democrats’ stimulus bill will do is stimulate more government and more debt.”

“The American people are asking, ‘What’s 13 bucks a week going to do to get this economy moving again for the average American?’” he said, referring to extra money that will come in paychecks because of reduced taxes withheld by employers.

The White House said it would take about a month for the money to start flowing. But a primary concern for economists is that the stimulus will come too late to do much good in 2009, when many forecasters think full-year output will contract.

“Unfortunately, the downward momentum in the economy is so steep that it is hard to see how the package can kick in quickly enough to make much difference to 2009,” said Nigel Gault, chief U.S. economist at IHS Global Insight.

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Republicans had pressed for larger tax cuts instead of big spending projects but most of their efforts to change the stimulus measure in both chambers failed.

They also cried foul that some programs ballooned, like quadrupling high-speed rail funding to $8 billion and that $450 million was added for Amtrak security, which was not in earlier versions of House and Senate bills.

They also questioned other spending, including $50 million for the National Endowment for the Arts and $300 million for updating the federal fleet with more fuel-efficient vehicles.

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“When you look at some of the spending in this bill, it will do nothing about creating jobs,” said House Minority Leader John Boehner.

The president has urged the Democratic-controlled Congress to pass the stimulus before the end of the coming holiday weekend so he can sign it into law. His goal is to create or save 3.5 million jobs in an economy that has seen massive job losses since the recession began in December 2007.

Obama pressed his case for the stimulus package earlier when he met corporate chief executives at the White House.

“It’s a plan that will ignite spending by businesses and consumers, make the investments necessary for lasting economic growth and prosperity,” Obama said, adding that 90 percent of jobs saved and created would be in the private sector.

The final package includes about $500 billion in spending and money for social programs like the Medicaid health insurance program for the poor. It has about $287 billion in tax cuts that include small tax incentives to spur home and automobile sales as well as business tax deductions.


Democrats trimmed down the package from as much as $937 billion to secure the votes of three Republicans that were needed to overcome procedural hurdles in the Senate and win final passage.

Republican Senators Susan Collins, Olympia Snowe and Arlen Specter agreed to back the legislation if it was below $800 billion. To achieve that, one major cut was tens of billions of dollars from grants to help states plug growing budget gaps.

Money for building schools was also stripped out and congressional negotiators severely scaled back tax incentives aimed at boosting flagging home and car sales that were deemed too expensive.

Still, the measure includes almost $54 billion to help states with their budget deficits and to modernize schools, $27.5 billion for highway projects, $8.4 billion for public transportation and $9.3 billion for Amtrak and high-speed rail service.

The final agreement also included limits on compensation for senior executives of companies receiving government aid from the $700 billion financial bailout, including restrictions on bonuses.

Additional reporting by Caren Bohan, Susan Cornwell, Emily Kaiser and Donna Smith; Editing by Peter Cooney