'We Have A Deal'

The White House and Senate Democrats secured a deal Friday with moderate Republicans to clear the way for passage of President Barack Obama’s economic recovery plan.

After days of watching from the sidelines, Rahm Emanuel, the president’s chief of staff, came to the Capitol Friday afternoon to help seal the final arrangements, and Majority Leader Harry Reid (D-Nev.) called a Democratic caucus for the evening to go over the revisions with his party.

“We have a deal” said one official, and Sens. Susan Collins (R-Maine) and Arlen Specter (R-Penn.), who were central to the negotiations, were expected to speak on the floor Friday night.

Emanuel came to participate with Reid in meeting with the two Republicans in Reid’s Capitol office. Reid had already signaled to Collins and Specter that he would accept spending cuts in the range of $80 billion. The addition of Emanuel indicates that that more concessions may have been added; having Emanuel present was good political insurance for Reid in dealing with House Democrats down the road.

Final details have not been released, but it appears the package, as initially brought to the Senate floor, will be scaled back by about $82 billion in spending reductions and $25 billion in tax cuts.

That would bring the base bill down to about $780 billion, Democrats said. And while this doesn’t reflect Senate amendments, all those added costs –including new tax breaks for car and home purchases—were adopted on bipartisan votes.

The stepped-up action came amid more bad news of payroll cuts out Friday. An increasingly impatient Obama said the continued delays were becoming “inexcusable and irresponsible.” 

Reid must now sell the package to his caucus, but appeared confident going into the evening meeting –together with Emanuel. Writing up the legislative text will take hours more, making it very unlikely that a vote can take place before Saturday. But the administration is anxious to get off the Senate floor this weekend, since long negotiations still lie ahead with the House.

New Labor Department numbers Friday showed that as many as 598,000 workers lost their jobs in January — the worst since 1974 and pushing the unemployment rate up to 7.6 percent. “These numbers demand action,” Obama said. “It is inexcusable and irresponsible to get bogged down in distraction and delay while millions of Americans are being put out of work. It is time for Congress to act.”

Senate passage would not be the end of the process but simply allow the administration to move into final negotiations with both the House and Senate together, when more adjustments are sure to be made. But 60 votes are needed to first waive Senate budget rules, and swing Republicans are demanding cuts up front before letting the bill go forward. 

Reid has said he is “cautiously optimistic” of success. But as Obama has stepped up his rhetoric, so has his old rival, Sen. John McCain (R-Ariz.), and Friday’s exchanges sometimes resembled a flashback to the 2008 presidential campaign. 

Added tax cuts have expanded the Senate package to the point where it is more than $100 billion above the House-passed bill. But Obama said the estimated $900 billion-plus price tag was “broadly speaking” the right size of the challenges now facing the economy. “It is the right scope. ... It will take months even years to renew our economy,” he said. “But every day that Washington fails to act, that recovery is delayed."

Taking on the Senate floor later, McCain accused his old opponent of failing to reach out to Republicans as much as Obama once promised.

“We want to have legislation that stimulates this economy,” said McCain. “But we want it to stimulate the economy, not mortgage the future of our children and our grandchildren by the kin of fiscal profligate spending that’s embodied in this legislation.”

McCain appeared to zero-in on those swing Republicans courted by Obama and Reid, and the hot rhetoric could make it more difficult to strike a deal.

Sen. Judd Gregg (R-N.H.) — just tapped by Obama to be the new Commerce secretary — has insisted so far that he will not participate in any more Senate votes, though it would be surprising for him to let the president fail based on this position. Sens. Susan Collins and Olympia Snowe of Maine and Specter are three Republican votes in play, and there was growing speculation that Sen. Edward M. Kennedy (D-Mass.), who has been absent from the Senate, may return if his vote is needed.

A handful of Republican moderates met privately in Specter’s first floor Capitol office Friday morning, after which Specter and Collins went upstairs to meet with Reid on a package of proposed cuts to help secure their support.

“The ball’s really in their court,” said Collins, speaking of the Democratic leadership. “And I am hopeful that they will respond to the points that we’ve made.”

Reid appears to be taking a more direct hand in dealing with swing Republicans like Collins. It was at her urging Thursday night that he changed his plan to keep the Senate in all night, and the two could be seen through the open doors of the Senate back lobby as she appealed to the Democratic leader to back away from what might have been a tense standoff.

“Everyone’s going to have to give a little and understand this is a process,” Reid said. Friday afternoon, he held an hour-long meeting with Collins and Specter at which he presented a counter offer estimated to include about $80 billion in savings. The fact that the discussion ran so long was a hopeful sign for Reid, but the two Republicans were slated to come back for what could be the final meeting—to be attended by Emanuel.

Collins herself favors some formulation that adds more money for infrastructure spending, such as clean water and transportation projects. But the risk is that the offsetting cuts become too much to sustain, and Reid’s challenge is to find the right balance between getting Republican votes and protecting his support on the left.

Any deeper cuts are sure to rile House Democrats. For this reason, having Emanuel on hand is good insurance for Reid, since the chief of staff is not just the president’s man but also a former lieutenant for Speaker Nancy Pelosi (D-Calif.).