Final Vote on Senate's Economic Stimulus Bill Expected Tuesday
Sunday, February 8, 2009
3:00 PM

The Senate continued its work Saturday on an economic stimulus bill, with the latest proposal trimming $108 billion from the original measure, although several floor amendments have raised the legislation's price tag.

It looks as if Senate Majority Leader Harry Reid (D-NV) will secure the 60-vote procedural hurdle that is needed to pass the bill, after winning support from Maine Republicans Susan Collins and Olympia Snowe. A final vote is expected Tuesday.

"I have to be very candid with everyone here," Reid said on Friday. "I have learned a lot in the last few days by people coming in good faith and saying what is in here should not be in here and, on a few occasions, listening to what was propounded by those who have come up with this bipartisan agreement. We had to swallow real hard, but it was all done in good faith."

A group of roughly 15 moderate-leaning senators from both parties -- led largely by Ben Nelson (D-NE) and Collins -- released details of the compromise agreement  late Friday night. The so-called "centrist coalition" and self-described "jobs squad" spent most of the week behind closed doors fleshing out the proposal with White House input along the way.

"We trimmed the fat, fried the bacon, and milked the sacred cows," Nelson said. "We recognize that our plan isn't perfect, but I believe it's both responsible and realistic."

The State Fiscal Stabilization Fund took the biggest hit. Set to receive $79 billion from both the House and Senate, the centrist coalition cut $40 billion, leaving $39 billion for restoring shortfalls in state education programs.

The centrists zeroed-out the Department of Housing and Urban Development's neighborhood stabilization program, the Department of Health and Human Service's Public Health and Social Services Emergency Fund, as well as school and university construction projects.

The compromise agreement also cuts the Advanced Broadband Program by $2 billion (leaving $6.65 billion), health information technology initiatives by $2 billion (leaving $3 billion), and Head Start by $1.05 billion (leaving $1.05 billion).

The economic stimulus legislation is far from being finalized. Once the Senate passes its version, a House-Senate conference committee will be tasked with negotiating a final version. Democratic leaders are sticking to their goal of sending a bill to President Obama by Feb. 13, leaving little time to hammer out the details of a massive stimulus package.

Senate Budget Committee Chairman Kent Conrad (D-ND), appearing on CBS's Face the Nation this morning, indicated that Senate negotiators will consider adding back some of the spending cuts in the Senate compromise bill (if House conferees press the issue), going on to say that he is confident the legislation can be improved in conference. 

Both parties have used the Congressional Budget Office's latest analysis to advance their respective points of view. In a letter to Senate Budget Committee Ranking Member Judd Gregg (R-NH), CBO concluded that both the House and Senate versions of the stimulus bills -- as originally crafted -- would increase economic output and lower unemployment for several years. However, the nonpartisan think tank also projected that the legislation would slightly reduce gross domestic product (GDP) compared with the baseline economic forecast over the long term.

Perhaps the most troubling of CBO's conclusions was that the macroeconomic impacts of this -- or any stimulus package -- are very uncertain.

"Economic theories differ in their predictions about the effectiveness of stimulus," CBO said. "Furthermore, large fiscal stimulus is rarely attempted, so it is difficult to distinguish among alternative estimates of how large the macroeconomic effects would be. For those reasons, some economists remain skeptical that there would be any significant effects, while others expect very large ones."

The stakes could not be higher. With Congress already facing a record $1.2 trillion deficit this fiscal year even without an economic stimulus package, the degree of success in borrowing another $800 to $900 billion will determine the level of spending cuts and tax hikes after the economy recovers to bring the annual federal deficit back to historically lower levels of two to three percent of GDP.