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Wednesday, January 28, 2009

"Stimulus Bill Near $900 Billion".

Stimulus Bill Near $900 Billion
Obama Agrees to Trim Alternative Minimum Tax; Lobbies Rush for Cut of the Pie

WASHINGTON -- The U.S. economic stimulus package neared $900 billion in the Senate, as President Barack Obama wooed Republicans ahead of an expected House vote Wednesday.

Question of the Day

The rare trip by a president to Capitol Hill revealed the urgency in Congress and the White House over a cure for the souring economy. More than 70,000 layoffs were announced this week and fresh data showed unemployment last month rose in all states.

The day was marked by Democratic deal-making. The Obama administration indicated it would agree to a $69 billion Senate proposal to shield tens of millions of middle-income Americans from the so-called alternative minimum tax, a priority of Iowa Sen. Charles Grassley, the top-ranking Republican on the Senate Finance Committee. The panel later folded the change into the Senate bill.

Who Gets What

See how some of the major stimulus spending will be shared by the states.

A Closer Look at the Plans

White House officials also spread the word that Mr. Obama was willing to drop a proposed expansion of contraceptive coverage under Medicaid that has become a symbol for Republican critics. Late Tuesday, Democratic leaders agreed to drop that provision, as well as another measure providing support for refurbishing the capital's National Mall, ahead of the final vote on the House floor Wednesday. Both measures had been lampooned by Republicans.

The magnitude of the spending bill, and its urgency, drew a swarm of lobbyists seeking money and tax breaks. The concrete and asphalt industries battled over how the government should spend billions proposed for road and bridge repairs, while dairy and beef cattle producers butted heads over talk that the government might buy up dairy cattle for slaughter to drive up depressed milk prices. Unions backed infrastructure spending. States sought budget bailouts.

"When you've got 800-plus billion dollars to spend, you'll have an equal number of opinions on how it should be spent," said Chris Galen, spokesman for the National Milk Producers Federation, the dairy industry's main lobbying group.

The economic stimulus package proposed by Democratic House leaders totals $825 billion and includes three broad pieces: a $365.6 billion spending measure for such brick-and-mortar projects as highways and bridges; a $180 billion measure to boost jobless benefits and Medicaid, among other things; and a $275 billion tax-relief package, which includes a plan to give a $500 payroll tax holiday to all workers, a proposal from Mr. Obama's presidential campaign.

President Obama said, 'We're not going to get 100% agreement, and we might not even get 50% agreement,' but he thought lobbying Congress was helpful.

The Democrats controlling the House have the votes to pass a stimulus bill. In the Senate, Democrats need only the support of a few Republicans to collect the 60 votes needed for passage. But Mr. Obama wants broad support, and to win over some of the Republicans seeking less spending and more tax cuts.

"I would love to not have to spend this money," Mr. Obama said, according to individuals familiar with the president's meetings with Republicans. Mr. Obama defended the plan, they said, but suggested he'd be open to new ideas to help small businesses, and that changes could come after the House vote.

"We're not going to get 100% agreement, and we might not even get 50% agreement," Mr. Obama told reporters after he left the Senate Republican lunch. "But I do think that people appreciate me walking them through my thought processes on this."

The sight of this much federal cash and tax favors has prompted a rough-and-tumble competition. Billions of dollars in proposed road and bridge repairs, for example, have pitted the concrete and asphalt industries against one another.

Concrete lobbyists want more money for such long-term projects as interstate highways, bridges and waterworks -- projects that, not coincidentally, use more concrete. The asphalt industry prefers repaving and road repair that use more asphalt.

"When you have a road or highway that needs to be fixed quickly, asphalt is the way to go," says Margaret Cervarich, a vice president at the National Asphalt Pavement Association.

Craig Silvertooth, the president of the Center for Environmental Innovation in Roofing, said he's concerned that lawmakers have failed to include tax incentives for energy-efficient roofs using solar panels. But the geothermal heat pump industry -- represented by lobbyists for one company, Oklahoma-based ClimateMaster Inc. -- said it won equal footing with solar and wind companies through a 30% homeowner tax credit in the House bill for installation of a geothermal heat pump.

Lobbyists for U.S. footwear makers and retailers want lawmakers to wall off their drive to scrap import taxes on cheap shoes from a competing push to lower tariffs on all imported clothing and textiles.

The shoe lobby sent a letter to congressional leaders Tuesday asking for a stimulus provision abolishing the import tax on synthetic, fabric and canvas shoes. The American Apparel & Footwear Association, the Footwear Distributors and Retailers of America and retail footwear companies say the tax can reach 67.5%.

Republican Sen. John Ensign of Nevada wants to add similar legislation to the stimulus. But the effort could fail if combined with a separate push by apparel importers to lower tariffs on all foreign textile and apparel products. The apparel measure faces stiff opposition from lawmakers and U.S.-based textile plants.

Business interests also are working to promote tax proposals included in the Senate version of the stimulus plan but not, so far, in the House version.

Both the House and Senate packages include tax incentives to encourage capital investments by businesses, expand support for development of renewable energy sources, and help businesses use current losses to claim tax refunds against profitable years in which they paid taxes.

The Senate tax package, which was approved by the Finance Committee late Tuesday on a 14-9 vote, also created a limited tax benefit to encourage corporations to restructure debt.

High-tech companies struck out with the House when they sought tax credits for spending on bringing broadband infrastructure to rural and so-called underserved areas. But the firms struck pay dirt Tuesday in the Senate Finance Committee, winning a 10% tax credit for investments in current-generation broadband technology, and a 20% tax credit for investments in "next-generation" broadband, not only in rural and underserved areas but any residential area.

Once the House and Senate pass their versions of the stimulus package, negotiators from each branch will hammer out a final version of the bill. The compromise bill would require a second vote in the House and Senate before reaching the president's desk.

The nonpartisan Congressional Budget Office said government borrowing prompted by enactment of the plan would add another $347 billion, pushing the estimated cost of the stimulus plan to more than $1 trillion, including interest.

Office of Management and Budget Director Peter Orszag sent a letter Tuesday to House Appropriations Chairman David Obey (D-Wis.) saying Mr. Obama was "committed to paying for any of the temporary tax cuts included in the recovery plan that he would like to make permanent," and supported a return to "pay-as-you-go" budget rules for nonemergency spending.

Write to Greg Hitt at and Elizabeth Williamson at

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