Senate Stimulus All-nighter

Faced with rising jobless claims and an impatient White House, the Senate prepared to work through Thursday night in hopes of making the final adjustments needed to win passage this week of a massive economic recovery bill sought by President Barack Obama.

“Legislation is the art of compromise, consensus building, that’s where we are,” Majority Leader Harry Reid (D-Nev.) Reid told his colleagues. “It’s 6:15 tonight and I would hope in the next 12 hours we can have a piece of legislation we can feel good about it.”

Central to the drama is a bipartisan bloc of more than a dozen senators who hold the balance of power and are struggling to reach agreement among themselves over how best to scale back the $924 billion package.

Cuts in the range of $90 billion to $100 billion have been discussed, but no firm proposal has emerged even after days of talks. Barring some agreement, the Appropriations leadership is preparing to step in with its own smaller package of targeted cuts in the range of $50 billion to strengthen support. And Senate Budget Committee Chairman Kent Conrad (D-N.D.) has been drafting his own amendment which could serve to test the waters.

The two major Republican alternatives –costing less than the administration’s plan –remain stymied as well. A $421 billion stimulus package—heavily tilted toward tax cuts and offered by the president’s old rival, Sen. John McCain (R-Ariz.)—was rejected 57-40 Thursday. A second GOP option, focused more on housing issues, fared even worse, going down 62-35. 

But as the Democratic proposal has continued to grow, the backroom talks reflect a nagging nervousness in the majority party about the high cost and the administration’s inability thus far to attracted broader support.

This has given rise to the bipartisan bloc led by Sens. Ben Nelson (D-Neb.) and Susan Collins (R-Maine), both of whom met individually with Obama on Wednesday. Most of the reductions would come from state aid and education funds as well as an array of lesser appropriations judged extraneous by critics to the core mission of the stimulus bill.

Collins is betting that if agreement can be reached it will bring along not just her vote but other Republicans. “That’s my hope. That’s the goal,” she said.

“The good news is where we’ve arrived costs less money and will probably create more jobs, and that’s a good thing,” said Sen. Evan Bayh (D-Ind.) after meetings Thursday afternoon. But he himself admitted no deal had been reached by Thursday evening, and Sen. Mel Martinez (R- Fla.) described the outlook as “shaky.”

The president’s impatience showed through during an appearance at the Energy Department where he snapped back at his critics in Congress: “The time for action is now,” he said. And in a sometimes blunt exchange with reporters, Reid warned that he would not allow the president’s program to be held “hostage.”

Asked if he had 60 votes already to ensure Senate passage, Reid said. “We believe we do.”

“Now would I like more votes? Of course I would,” Reid said. “But our No. 1 goal is to pass this bill. So as I explained …they cannot hold the president of the United States hostage. If they want to work constructively, we will work with them….If they think they’re going to rewrite this bill, Barack Obama is going to walk away. “ 


Out of deference to Reid, the White House seemed to be back-tracking from jumping into the negotiations itself. Collins said Obama had promised Wednesday his economic team would be available to her, and Thursday morning, Collins predicted the administration could be coming to Capitol Hill in the afternoon.

But Reid said, “The president instructed me to work with them if it’s going to help the legislation.&rdqo; And a White House official indicated that the decision had been made to leave the matter “to Harry.”

Despite Reid’s confidence that he already has 60 votes, the number and range of senators participating in the Nelson-Collins group can’t be ignored.

In looking for cuts, the easiest political target is an estimated $355 in new discretionary appropriations in the package. If $90 billion to $100 billion were cut, it would represent a more than 25% reduction from these accounts. Many are relative small, safe targets, such as State Department funds or Commerce agencies. But to get to their goal, the moderates would also have to take on state fiscal aid and education funding.

The talks follow a day of intense one-on-one lobbying by the president himself Wednesday even as he warned Republicans against making "the perfect the enemy of the essential." In a Wednesday morning phone call, Obama reached out to his old rival, McCain and then held a set of remarkable face-to-face meetings with swing senators, like Collins, without any aides present.

An the Republican side, McCain’s own package was not only smaller than the president’s but devoted about 70 percent of its resources to tax cuts — a much greater share than either the House or Senate stimulus bills offered by Democrats.

Included in this number was a $165 billion less-targeted version of Obama's own payroll tax break, as well as a $20 billion homeowner tax credit already adopted by the Senate. More than many conservatives, McCain is willing to commit new benefits to help the unemployed and families facing foreclosure on their homes.

The second major Republican alternative, sponsored by Sen. John Ensign of Nevada, reflects the minority’s efforts to turn the stimulus debate back more toward housing—the root cause, many argue for the economic downturn.

Passage Wednesday night of the expanded $15,000 tax credit to boost home sales was a first step, and Ensign offered a more ambitious proposal designed to make new and refinanced mortgages available at rates of 4% to 4.5%.

The government’s commitment would be capped at $300 billion, but he predicted that as many as 40 million homeowners could benefit – and that the lower rates will counter forecasts that housing values will drop another 12% this year.

“It’s not just homeownership, people are losing their jobs,” countered Sen. Ben Cardin (D- Md.), and after months of fighting with the Bush Administration over the housing crisis, some Democrats are incredulous at the new Republican focus on the problem.

The scale and cost of the Ensign proposal worried some Republicans as well; five joined Democrats in defeating the proposal, 62-35.