WASHINGTON (AP) — Economic stimulus legislation at the heart of President Barack Obama's recovery plan is on track for final votes Friday in the House and Senate after a dizzying final round of bargaining that yielded agreement on tax cuts and spending totaling $789 billion.
Obama, who has campaigned energetically for the legislation, welcomed the agreement, saying it would “save or create more than 3.5 million jobs and get our economy back on track.”
The $500-per-worker credit for lower- and middle-income taxpayers that Obama outlined during his presidential campaign was scaled back to $400 during bargaining by the Democratic-controlled Congress and White House. Couples would receive $800 instead of $1,000. Over two years, that move would pump about $25 billion less into the economy than had been previously planned.
Officials estimated it would mean about $13 a week more in people's paychecks this year when withholding tables are adjusted in late spring. Next year, the measure could yield workers about $8 a week. Critics say that's unlikely to do much to boost consumption.
“The most highly touted tax cut in the original proposal now translates into $7.70 a week for middle-class workers,” said Senate GOP Leader Mitch McConnell of Kentucky.
Millions of people receiving Social Security benefits would get a one-time payment of $250 under the agreement, along with veterans receiving pensions, and poor people receiving Supplemental Security Income payments.
An additional $46 billion would go to transportation projects such as highway, bridge and mass transit construction; many lawmakers wanted more.
Brendan Daly, spokesman for Speaker Nancy Pelosi, D-Calif., and Don Stewart, an aide to McConnell, said final votes are likely in the House and Senate on Friday.
The Obama plan offers a 60 percent subsidy to help unemployed people pay health insurance premiums under the COBRA program and divvies up $87 billion among the states to help them with their Medicaid costs for the next two years. It provides $19 billion to modernize health information technology systems, even though such funding will create few jobs right away.
To tamp down costs, several tax provisions were dropped or sharply cut back. A provision popular with Republicans and the big business lobby that would have awarded about $54 billion to money-losing businesses over the next two years was instead limited to small businesses, greatly reducing its cost.
A $15,000 tax credit for anybody buying a home over the next year was dropped; instead, first-time homebuyers could claim an $8,000 credit for homes bought by the end of August. Car buyers could deduct the sales tax they paid on a new car but not the interest on their car loans.
But nothing could shake negotiators from insisting on including $70 billion to shelter middle- to upper-income taxpayers from the alternative minimum tax, originally passed a generation ago to make sure the super-rich didn't avoid taxes.
The move is aimed at easing political and logistical headaches for lawmakers who wanted to do the so-called AMT “patch” now rather than later. The Congressional Budget Office estimates that provision will have relatively little impact on the economy.
In late-stage talks, Obama and Senate Majority Leader Harry Reid, D-Nev., pressed for $8 billion to construct high-speed rail lines, quadrupling the amount in the bill that passed the Senate on Tuesday.
AT A GLANCE
Here are some highlights of a nearly $789 billion compromise version of President Barack Obama's economic recovery plan agreed to by Democrats and moderate Senate Republicans.
AID TO POOR AND UNEMPLOYED
• $40 billion to provide extended unemployment benefits through Dec. 31, and increase them by $25 a week; $20 billion to increase food stamp benefits by 14 percent; $4 billion for job training; $3 billion in temporary welfare payments.
DIRECT CASH PAYMENTS
• $14 billion to give one-time $250 payments to Social Security recipients, poor people on Supplemental Security Income, and veterans receiving disability and pensions.
• $46 billion for transportation projects, including $27 billion for highway and bridge construction and repair; $8.4 billion for mass transit; $8 billion for construction of high-speed railways and $1.3 billion for Amtrak; $4.6 billion for the Army Corps of Engineers; $4 billion for public housing improvements; $6.4 billion for clean and drinking water projects; $7 billion to bring broadband Internet service to underserved areas.
• $21 billion to provide a 60 percent subsidy of health care insurance premiums for the unemployed under the COBRA program; $87 billion to help states with Medicaid; $19 billion to modernize health information technology systems; $10 billion for health research and construction of National Institutes of Health facilities.
• $47 billion in state fiscal relief to prevent cuts in state aid to school districts, with great flexibility to use the funds for school modernization and repair; $25 billion to school districts to fund special education and the No Child Left Behind law for students in K-12; $17 billion to boost the maximum Pell Grant by $500 to $5,350; $2 billion for Head Start.
• $2.8 billion for homeland security programs, including $1 billion for airport screening equipment.
• $4 billion in grants to state and local law enforcement to hire officers and purchase equipment.
NEW TAX CREDIT
• Approximately $115 billion for a $400 per-worker, $800 per-couple tax credits in 2009 and 2010. For the last half of 2009, workers could expect to see perhaps $13 a week less withheld from their paychecks starting around June. Millions of Americans who don't make enough money to pay federal income taxes could file returns next year and receive checks. Individuals making more than $75,000 and couples making more than $150,000 would receive reduced amounts.
EXPANDED COLLEGE CREDIT
• About $13 billion to provide a $2,500 expanded tax credit for college tuition and related expenses for 2009 and 2010. The credit is phased out for couples making more than $160,000.
• $3.7 billion to repeal a requirement that a $8,000 first-time home buyer tax credit be paid back over time for homes purchased from Jan. 1 to August 31, unless the home is sold within three years.
• $2.5 billion to makes sales tax on paid on new car purchases tax deductible.