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Senate reaches tentative deal on stimulus

WASHINGTON - President Barack Obama's economic recoveryplan is on track to pass the Senate after a handful of moderateRepublicans and Democrats forced more than $100 billion in cuts inprograms that wouldn't create many jobs right away.

But the group backed away from a confrontation that threatenedto kill the legislation altogether after White House Chief of StaffRahm Emanuel weighed in to urge Democrats make a final round ofconcessions.

Architects of the compromise included Susan Collins, R-Maine,and Ben Nelson, D-Neb., who represented a broader group ofmoderates unhappy that so much money went into programs theythought wouldn't create jobs. Eventually, every Republican exceptCollins and Arlen Specter, R-Pa., left the talks, which finallyproduced a deal with the White House late Friday afternoon.

While ensuring passage of Obama's plan in the Senate within afew days, the deal sets up difficult negotiations with the House.

Officials put the cost of the bill at $827 billion, includingObama's signature tax cut of up to $1,000 for working couples. Alsoincluded is a tax credit of up to $15,000 for homebuyers andsmaller breaks for people buying new cars. Much of the new spendingwould be for victims of the recession, in the form of unemploymentcompensation, health care and food stamps.

In a key reduction from the bill that reached the Senate floorearlier in the week, $40 billion would be cut from a "fiscalstabilization fund" for state governments, though $14 billion toboost the maximum for college Pell Grants by $400 to $5,250 wouldbe preserved, as would aid to local school districts for the NoChild Left Behind law and special education.

A plan to help the unemployed purchase health insurance would bereduced to a 50 percent subsidy instead of two-thirds.

Senate Majority Leader Harry Reid, D-Nev., who had sought Fridayto cut just $63 billion in spending from the bill, throwing amonkey wrench into the talks, called it an imperfect compromise. Hewarmly praised it nonetheless.

"But at the end of the day, we are passing a bold andresponsible plan that will help our economy get back on its feet,put people to work and put more money in their pockets," Reidsaid.

Despite a 58-41 majority bolstered by the elections, Democratsneed 60 votes to clear a key procedural hurdle on Monday andadvance the bill to a final vote.

In addition to Collins and Specter, Republican Sen. OlympiaSnowe of Maine pledged to vote for the legislation.

The end-stage negotiations played out against a backdrop of yetanother dismal jobs report -- 598,000 jobs lost in January and thenational unemployment rate rising to 7.6 percent.

At its core, the legislation is designed to ease the worsteconomic recession in generations, and combines hundreds ofbillions of dollars in spending to boost consumption by the publicsector, along with tax cuts designed to increase consumer spending.

States would get large sums aimed at forestalling cuts inservices or tax increases.

Much of the money would go for victims of the recession in theform of food stamps, unemployment compensation and health care.There is money, as well, for construction of highways and bridges.

It's hoped that the combined effort would work its way into theeconomy and save or create 3 million jobs or so to begin to easethe nation out of the recession by the end of this year.


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