Senate passes $838B stimulus

Senate Democrats passed an $838 billion stimulus package on Tuesday with support from three Republicans, advancing President Obama’s core economic policy objective that now must be reconciled with the House.

The 61-37 vote came only after senators agreed minutes earlier to waive a budget point of order by the same margin. The latter required 60 votes. Having just three Senate Republicans on board means Democrats are clinging to a razor-thin majority in the Senate where a few members of the minority are needed to advance difficult legislation.

{mosads}That puts pressure on House Speaker Nancy Pelosi (D-Calif.) and House Democrats. Either they accept the bulk of the spending cuts adopted in the upper chamber — most of them to win the backing of Republican Sens. Arlen Specter (Pa.), Susan Collins (Maine) and Olympia Snowe (Maine) — or risk imploding the legislation that Obama says is needed to keep the economy from plunging into “catastrophe.”

Advisers to President Obama have already begun to convey that message to Pelosi so that lawmakers avoid prolonged negotiations between the two chambers.

Lawrence Summers, President Obama’s senior economic adviser, has declared the Senate and House bills are 90 percent the same, making it a little more difficult for House lawmakers to balk at the Senate changes.

Democratic leaders had set a deadline of Presidents Day for the legislation, but leaders could test that goal by engaging in a formal conference.

Senate Majority Leader Harry Reid (D-Nev.) has warned colleagues that he will cancel the weeklong Presidents Day recess if work is not completed in time.

Reid has also asked House leaders to consider the fragility of the coalition that supported the Senate’s version of the stimulus, sending a message that Democrats across the Capitol should not push too hard a bargain in conference.

The Senate version includes two major GOP-proposed tax breaks, a $70 billion one-year freeze of the Alternative Minimum Tax and $19 billion in tax credits for homebuyers in 2009.

The Senate would also suspend taxes on unemployment benefits up to $2,400, a GOP-favored proposal that House Democrats rejected pointedly.

The Senate bill would subsidize only 50 percent of the cost of healthcare insurance for the unemployed, compared to 65 percent in the House version.

In total, the Senate package will include about $366 billion worth of tax breaks, according to a Democratic aide, nearly 44 percent of the cost of the entire package. The House package includes only $275 billion worth of tax cuts, or 33 percent of the total cost.

The overall ratio of federal spending to tax relief could prove the most challenging difference for negotiators to solve.