Summoned back from summer break, the House on Tuesday pushed through an emergency $26 billion jobs bill that Democrats said would save 300,000 teachers, police and others from election-year layoffs. President Barack Obama immediately signed it into law.
CBS News Correspondent Chip Reid reports that both parties were happy the president signed the bill: Democrats because it gives them a jobs bill to brag about back home and Republicans because it helps them argue that Democrats are leading the nation to financial ruin.
Lawmakers streamed back to Washington for a one-day session as Democrats declared a need to act before children return to classrooms minus teachers laid off because of budgetary crises in states that have been hard-hit by the recession.
Republicans saw it differently, calling the bill a giveaway to teachers' unions and an example of wasteful Washington spending that voters will punish the Democrats for in this fall's elections. The legislation was approved mainly along party lines by a vote of 247-161.
The aid for the states is to be paid for mostly by closing a tax loophole used by multinational corporations and by.
Obama, joined by teachers at a Rose Garden ceremony earlier in the day, said, "We can't stand by and do nothing while pink slips are given to the men and women who educate our children or keep our communities safe."
The Senate narrowly passed the measure last Thursday, after the House had begun its August break.
The legislation provides $10 billion to school districts to rehire laid-off teachers or to ensure that more teachers won't be let go before the new school year begins. The Education Department estimates that could save 160,000 jobs.
Education Secretary Arne Duncan said his department would streamline the application process to get the money to local school districts quickly. He said three-fourths of the nation's districts have said they would be opening the school year with fewer teachers and "we wanted to avert a crisis for this year."
An additional $16 billion would extend for six months increased Medicaid payments to the states. That would free money for states to meet other budget priorities, including keeping more than 150,000 police officers and other public workers on the payroll.
Some three-fifths of states have already factored in the federal money in drawing up their budgets for the current fiscal year. The National Governors Association, in a letter to congressional leaders, said the states' estimated budget shortfall for the 2010-12 period is $116 billion, and the extended Medicaid payments are "the best way to help states bridge the gap between their worst fiscal year and the beginning of recovery."
Not all governors were on board. Mississippi Republican Haley Barbour said his state would have to rewrite its budget and would have to spend $50 million to $100 million to get its additional $98 million in education grants.
The $26 billion package is small compared to previous efforts to right the flailing economy through federal spending. But with the election approaching, the political stakes were high.
"Teachers, nurses and cops should not be used as pawns in a cynical political game" resulting from "the Democratic majority's failure to govern responsibly," said Rep. David Dreier, R-Calif.
"Where do the bailouts end?" asked Republican leader John Boehner of Ohio. "Are we going to bail out states next year and the year after that, too? At some point we've got to say, 'Enough is enough."'
But Democratic Rep. Jay Inslee said his state of Washington would get funds to keep 3,000 teachers. Republicans, he said, "think those billions of dollars for those corporate loopholes is simply more important than almost 3,000 teachers and classrooms in the state of Washington."
Rep. Jim McDermott, D-Wash., said Republicans ignore the fact that the law would not add to the federal deficit. "They want to do everything in their power to make certain that President Obama can't get this country going again. I think in November they are going to find it was a dumb policy."
The means of paying for the bill, a result of difficult negotiations in the Senate, were contentious.
Republicans objected to raising some $10 billion by raising taxes on some U.S.-based multinational companies. Advocates for the poor protested a provision to accelerate the phasing out of an increase in food stamp payments implemented in last year's economic recovery bill. Under the measure, payments would return to pre-stimulus rates in 2014, saving almost $12 billion.
James Weill, president of the Food Research and Action Center, said that would be cutting benefits for some 40 million people now receiving food stamps. "Those families will be hungrier and less able to buy healthy diets," he said.
Weill's group estimated that a family of four that may now receive about $464 a month in food stamps stood to lose about $59. Democrats gave assurances that they would look for other ways to pay for the law before the payment cuts go into effect in four years.
"The cutbacks in food stamps in the bill are plain wrong," said House Appropriations Committee Chairman David Obey, D-Wis.
American Federation of State, County and Municipal Employees President Gerald McEntee rejected GOP arguments that the Democrats' primary purpose with the legislation was to reward their friends in organized labor. "We're in tough shape out there with these incredible holes in these state budgets. To the American people it's tremendously important and will give a little lift to the economy," he said of the legislation.
The House on Tuesday also passed a $600 million measure to boost security on the U.S.-Mexican border by hiring more enforcement officers and making greater use of unmanned surveillance drones. That bill still has to go back to the Senate.