WASHINGTON - Moving with remarkable speed, key lawmakers and the White House reached a final agreement Wednesday on a $789 billion economic stimulus measure designed to create millions of jobs in a nation reeling from recession.
"I am pleased to announce we've been able to bridge those differences," said Senate Majority Leader Harry Reid.
Earlier, President Barack Obama said machinery giant Caterpillar Inc. plans to rescind some of the 22,000 layoffs the firm recently announced — once the stimulus is signed into law.
The real decisions were made in Capitol office suites where House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid and other key lawmakers, often joined by White House officials and their own aides, worked late Tuesday night and picked up again in the morning.
Sen. Max Baucus, D-Mont., one of the negotiators, said there was agreement to hold the bill to $789 billion, tens of billions below the cost of both the House and Senate bills that had cleared in recent days, and that 35 percent of the total would be in the form of tax cuts.
The reductions in the bill's size caused grumbles among liberal Democrats, who described them as a concession to the moderates, particularly Sen. Arlen Specter, R-Pa., who are under pressure from conservative Republicans to hold down spending.
The principal components of the emerging measure included money to help victims of the recession, as much as $44 billion in aid for states, which face cuts of their own as a result of lower tax receipts, and the president's proposed tax cut for lower and middle-income wage earners.
Negotiators tentatively agreed to include a one-time payment to recipients of Social Security, Supplemental Security Income and veterans' pensions and disability. While the size of the checks remained unsettled, officials said it would be less than the $300 originally proposed by the Senate.
Officials said there was agreement to accept the White House's call to provide the tax break to workers who pay Social Security taxes but do not earn enough to owe income taxes, although it was possible the amount would be scaled back somewhat. The president sought $500 for individuals and $1,000 for couples.
Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said. The agreement would allow taxpayers to deduct the sales tax paid on new car purchases, but not the interest on loans for the same vehicles.
It also appeared a compromise was in the works on the administration's demand for school construction funds.
Sen. Tom Harkin, D-Iowa, told reporters that $6 billion would be set aside, and officials said it could be spent only on repair and modernization work, a limitation designed to appease the moderates.
But officials said House Democrats were holding out for as much as $9 billion.
With numerous demands for the funds in the bill, lawmakers worked to satisfy competing demands.
A Senate-passed provision to give $10 billion to the National Institutes of Health for research -- a favorite of both Harkin and Specter, appeared likely to survive.
The officials who described the negotiations did so on condition of anonymity, saying they were not authorized to disclose the details of the closed-door negotiations.
'The work is not over'
Obama has spoken out repeatedly in recent days to urge Congress to act quickly in the face of the worst economic crisis since the Great Depression.
"We're at the doorstep of getting this plan through Congress, but the work is not over," he said in Springfield, Va., where he visited a construction site.
Even after the measure becomes law, he said, the challenge will be to effectively make use of the funds in an "endeavor of enormous scope and scale."
Republicans, too, took note of the size of the bill, and they said it included billions that would be wasted.
The original House bill, with a price tag of $820 billion, passed without a single Republican vote.
The $838 billion Senate bill that cleared on Tuesday had the backing of only three of 41 Republicans — but that was enough to give it the 60 votes it needed.
Collins told reporters she hoped fellow GOP lawmakers would reconsider when the final compromise comes to a vote "rather than just reflexively oppose this."
She said the negotiators had "tightened and scrubbed it" to eliminate wasteful spending.