Senate OKs stimulus - now, deal time

The vote largely followed party lines. Next stop: Negotiations with the House to resolve differences in their respective economic recovery packages.

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By Jeanne Sahadi, senior writer

NEW YORK ( -- An $838 billion economic recovery package cleared the Senate on Tuesday in a 61-to-37 vote, setting the way for negotiations with the House on a final bill.

The package provides roughly $293 billion for tax relief and $546 billion for spending measures, according to the Congressional Budget Office.

Only three Republicans - Sens. Susan Collins and Olympia Snowe of Maine and Sen. Arlen Specter of Pennsylvania - voted for the bill. No Republicans voted for the $820 billion House version of stimulus, which included $182 billion in tax relief and $638 billion in spending.

The Senate bill is not the last stage in the process. The next step will be for a committee of representatives from the Senate and the House to reconcile the differences between each chamber's proposed economic recovery package.

Where the differences are

In some cases, the Senate bill contains measures that don't appear in the House bill.

Among them are three tax amendments: One would protect middle- and upper middle-income families from having to pay the Alternative Minimum Tax; the others would offer new temporary tax breaks for individuals who buy a home or car this year.

In cases where the House and Senate offer identical spending or tax measures, they may differ in scope.

For instance, both bills offer President Obama's Making Work Pay Credit, but the income thresholds below which one may qualify for the full $500 per worker ($1,000 per couple filing jointly) differ. The Senate would limit the full credit to those making $70,000 or less ($140,000 for couples). The House puts those thresholds at $75,000 and $150,000.

In terms of business tax breaks, there's a fair amount of consensus between the two bills. The House and Senate both included a measure that would expand businesses' ability to write off their losses, but the Senate provision is somewhat more generous.

Two areas likely to be contentious in the House-Senate negotiations will pertain to funding for education and funding for a state fiscal stabilization fund.

The Senate package reduced or eliminated the funding for a number of education measures that Democrats in the House and President Obama supported.

The amended Senate bill does not include funding for K-12 construction and improvements to higher education facilities. The House bill allocated $20 billion for the measures. While both bills call for an increase in the maximum college Pell Grant, the Senate bill allocates $13.9 billion, or about $1.7 billion less than the House bill.

The Senate bill also reduces new funding for a state fiscal stabilization fund to $39 billion from $79 billion in the House bill. The fund is intended to allow state and local governments to continue funding education and other services like law enforcement without having to raise taxes or cut vital programs.

"My sense is that by far the biggest sticking point will be the huge cuts in the House-approved aid to the states," said Greg Valliere, chief political strategist for the Stanford Group, a policy research firm based in Washington, D.C.

Negotiations already under way

Once the final Senate vote was taken on Tuesday, the Senate named the five senators who will negotiate the final package with the House: Appropriations Chairman Daniel Inouye, D-Hawaii; Finance Chairman Max Baucus, D-Mont.; Majority Leader Harry Reid, D-Nev.; Appropriations Ranking Member Thad Cochran, R-Miss., and Finance Ranking Member Charles Grassley, R-Iowa.

Reid, D-Nev., told reporters after the vote that the negotiations would start soon and could last through the night. "We think we can get a lot of our work done in the next 24 hours."

But he also acknowledged that some provisions could take longer to resolve. "I've got the House to worry about. I've got the president to worry about. And I've got three Republicans that I'm concerned about," Reid said.

Those three quarters will be pressing for changes. House Democrats are expected to push to restore some of the funding cut by the Senate. Two of the three Republican senators who voted for the bill have indicated their votes couldn't be guaranteed if the final bill turns out to be larger or significantly different than what the Senate passed.

And the White House will be pushing to amend certain measures. Reid met with Obama on Tuesday morning along with House Speaker Nancy Pelosi, D-Calif. Reid didn't reveal what the president told them, but said that Obama's "differences with the bill we have here are very, very minimal."

Referring to the ultimate cost, Reid said, "We're going to work at a number that satisfies the House and the Senate."

But it's unlikely the deal will satisfy the majority of Republicans, who still contend that too much money in the House and Senate bills will be spent on measures that are not, in their view, likely to create jobs.

"On a cost-benefit ratio, what I'm telling you is that the vast majority of Republicans in the House and Senate feel that this measure is not timely, temporary or targeted," Senate Minority Leader Mitch McConnell, R-Ky., told reporters after the vote. To top of page

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