Yesterday, Sen. Harry Reid (D-NV) announced that the House and Senate had ironed out the differences between their two recovery packages to agree on a $789 billion bill. “The middle ground we’ve reached creates more jobs than the original Senate bill and spends less than the original House bill,” Reid boasted. The Washington Post noted that, after all the wrangling, “the bill followed remarkably closely to the broad outline that Obama had painted more than a month ago,” with a roughly 60 percent-40 percent split between spending and tax breaks.
The compromise made vital improvements to the Senate version, which would have created 9 to 12 percent fewer jobs than the version passed by the House while costing $17 billion more. The new compromise cuts out big business giveaways, restores education funding, and raises funding for science research, among other improvements to the Senate bill:
— Eliminates big business tax giveaway. The compromise cut a provision from the Senate bill that allowed companies of any size to claim an estimated $67.5 billion in tax refunds this year and next, by allowing companies to write off losses from 2008 against taxes paid over the last five years.
— Removes nuclear loans. The $50 billion in loans for the nuclear industry, which were snuck into the Senate bill by “budget gimmickry” and which would not have created a single job for many years, were completely eliminated by the conference committee.
— Slashes tax cut for rich homeowners. The Senate bill granted a $15,000 tax cut to new home buyers, a provision Nobel Prize winner Paul Krugman called a “bonus to affluent people who flip their houses.” The new compromise “drastically reduced” the tax credit, cutting the overall cost from $35 billion to about $5 billion.
The bill also allocates $30 billion for smart grid technology and energy efficiency measures and nearly $46 billion to fund education and modernize schools, “considerably higher than the Senate’s $39 billion total.” The Wall Street Journal also notes that the compromise significantly “expands federal aid to an array of programs aimed at the poor and jobless, with billions of dollars for health care, unemployment insurance, food stamps and other programs.”
Though President Obama admitted this week that “the plan is not perfect,” it’s clear the congressional compromise is a dramatic improvement over the Senate bill passed earlier this week. The final bill, after passing both houses of Congress, is expected to arrive on Obama’s desk no later than Monday.