February 9, 2009 / 6:15 PM / 9 years ago

Senate set to pass recovery package

WASHINGTON (Reuters) - The Senate on Monday headed toward passing an $827 billion economic stimulus measure sought by President Barack Obama that will set up a contentious battle over the details of the final package.

<p>President Barack Obama departs via the Marine One helicopter for a town hall meeting to push his economic stimulus package in Elkhart, Indiana, from the White House in Washington, February 9, 2009. REUTERS/Jonathan Ernst</p>

As the world watched to see how the new president and Congress respond to the worst U.S. recession in 70 years -- and after slicing some $110 billion out of the package -- the Senate was poised to clear a procedural hurdle in a vote at 5:30 p.m.

The Senate measure includes $139 billion in individual income tax breaks, $43 billion for more unemployment benefits and almost $47 billion to encourage Americans to buy new cars and homes. It also includes tens of billions of dollars to rebuild roads and help states plug growing budget gaps.

If the Senate approves its version on Tuesday as expected, it will have to be reconciled with an $819 billion package the House of Representatives passed last month, a process expected to take several days.

Obama wants a final package on his desk this weekend.

“We’re going to do our utmost to do this as quickly as possible,” Senate Democratic Majority Leader Harry Reid, said on the Senate floor before the vote to wrap up the chamber’s debate. “We have to complete this work this week.”

The Senate compromise cut some $40 billion from the $79 billion to help states, $16 billion for school construction and $5.8 billion for preventative health initiatives, prompting calls from Obama and Democrats to restore some of it.


“I’ll be honest with you, the Senate version cut a lot of these education dollars. I would like to see some of them restored,” Obama said in Indiana as he embarked on a weeklong campaign to build support for the stimulus package.

He holds a televised White House news conference at 8 p.m. EST to further rally public support. U.S. stock markets lost a little ground ahead of the stimulus votes and an announcement for a new rescue plan to help banks also due Tuesday.

While Democrats are expected to seek to restore some of that money when lawmakers reconcile the House and Senate bills this week, many Republicans decried the compromise and said even more money should be excised from the legislation.

<p>Senator Max Baucus (D-MT) (FROM R), Senate Majority Leader Harry Reid (D-NV), Senator Charles Schumer (D-NY), Senator Richard Durbin (D-IL) and Senator Patty Murray (D-WA) talk with reporters about a deal to pass President Barack Obama's economic stimulus bill at the US Capitol in Washington, February 6, 2009. REUTERS/Jonathan Ernst</p>

“What we have done is eliminated 10 items, reduced others, which will probably be restored,” said Senator John McCain, who lost to Obama in the 2008 presidential election. “We are robbing future generations of Americans of their hard earned dollars because we are laying on them a debt of incredible proportions.”

A stimulus plan of $827 billion, aimed at ending a recession that began in December 2007, would be about 5.7 percent of gross domestic product, or about a quarter of the size of the annual federal budget.

Obama campaigned on a promise to work for a more cooperative atmosphere in Washington but ran up against stiff Republican opposition on his first big challenge. No Republicans backed the bill in the House and only a few Senate Republicans expressed their support.

Even with so many Republican concerns, Obama had the public on his side in his first major showdown with Congress since taking office three weeks ago.

A Gallup survey found 67 percent of respondents approve of the way Obama has sought stimulate the economy while Democrats and Republicans in Congress received much lower approval ratings of 48 percent and 31 percent, respectively.


The two chief authors of the Senate compromise conceded it was not perfect, but said the mix of tax cuts and new spending would create or save up to 4 million jobs.

“It’s a good package and one that our country really needs,” Republican Senator Susan Collins of Maine said.

“We’re facing a crisis and it makes no sense to have a partisan divide on the most important issue facing our country,” Democratic Senator Ben Nelson of Nebraska added in a joint appearance with Collins on NBC’s “Today Show.”

Collins and Nelson shaved the proposed cost of the measure by about $110 billion, attracting the support and expected votes of virtually all of the Senate’s 58 Democrats but apparently just three of 41 Republicans. Still, that would give them the 60 votes needed to secure passage, expected Tuesday.

The House bill has more spending and less in tax cuts than the scaled back Senate version. A Republican leadership aide predicted tough times in trying to agree on a final bill in the next several days. A Democratic aide said, “I think we’ll do it, but it’ll be a heavy lift.”

Nelson said: “I hope that the (House-Senate negotiating) conference will not get into an auction or a bidding war.”

Additional reporting by Deborah Charles; editing by David Storey

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