Recovery+Package+Renegotiated

2/11/09 The scale of the package accords closely with Mr. Obama's original, $775 billion target and is significantly scaled back from the $930 billion package under consideration last week in the Senate. The new package's overall size meets a condition set by a small group of Republican Senators who broke with the Republican Senate leadership and voted for the Senate package late last week. Their support will be crucial when the compromise package comes back for a vote in the Senate, where Democrats need the votes of all 58 senators from their own party, plus at least two Republicans. Lawmakers are discussing trimming the cost of Senate-approved tax cuts intended to spur auto and home sales, but would preserve a $70 billion measure intended to shield millions of middle income Americans from the alternative minimum tax, a levy originally designed to hit the wealthy. But lawmakers from both parties wanted to keep the measure in the stimulus package, rather than pass it separately later in the year. That crowded out other projects the White House had pushed for. Mr. Obama's "Making Work Pay" tax cut—a payroll tax holiday for workers--would be scaled back, under the framework being negotiated. One proposal under discussion would set the value of the benefit at $400 for individual workers, down from $500, and $800 for couples, down from $1,000. The president's proposal to subsidize private insurance for people who have been laid off, through the federal COBRA plan, and to allow states to expand Medicaid for the unemployed, is all but gone. White House efforts to restore other assistance to hard-hit state and local governments had only partial success. Sen. Ben Nelson (D. Neb.) said Wednesday that he understood that the final bill would be roughly $790 billion, but he indicated that negotiations were still continuing over details such as the scope of plans to use stimulus money to finance construction or renovation of schools.
 * Recovery Package Renegotiated **
 * Background **: The House of Representatives passed a more generous $930 billion bill, but is negotiating to pass a $789.5 billion bill that can pass the House and Senate this Thursday.
 * Compromises: ** The White House agreed to trim a payroll tax holiday, aid to ailing state governments and initiatives to provide health care for laid-off workers. In exchange for giving ground on those issues, Mr. Obama was able to restore at least $12 billion in school-construction funds cut from the Senate bill.
 * Less Aid **: The final deal may strain to reach Mr. Obama's goal of creating or saving four million jobs, some economists said. The proposed package includes less direct aid to states than Mr. Obama had proposed. A dollar sent to a state government to stave off cuts in services or layoffs yields $1.38 in economic boost, according to models used by the White House and Congress to calculate economic benefit. By contrast, the proposed package's inclusion of a measure to slow the expansion of the alternative minimum tax will yield only 50 cents of stimulus for every dollar of avoided tax, the models predict. Some economists said the plan won’t save the jobs promised.