TOPICS > Economy

Congress Strikes Tentative $789B Deal on Stimulus Plan

February 11, 2009 at 6:00 PM EDT
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Congressional leaders announced that they have reached a deal on a stimulus plan Wednesday -- although talks continued late in the day on the bill's final details. The Hotline's Amy Walter discusses the negotiations and Jeffrey Brown reports on the day's Congressional testimony on the financial rescue plan.

JUDY WOODRUFF: Leaders in the Senate reported a tentative deal today on the final version of an economic stimulus bill. Gwen Ifill has our lead story report.

GWEN IFILL: Senate negotiators emerged from behind closed doors today to announce hard-won agreement on a $789 billion economic recovery plan. The lawmakers said the plan would save or create 3.5 million jobs, spend $150 billion on infrastructure and $270 billion in tax cuts.

One of the key Senate negotiators, Maine Republican Susan Collins, emphasized that the agreement will cost less than either the House or the Senate version.

SEN. SUSAN COLLINS (R), Maine: I’m particularly pleased that we have produced an agreement that has a top line of $789 billion. That is less than either the House- or the Senate-passed bills. It is a fiscally responsible number that reflects our efforts to truly focus this bill on programs and policies and tax relief that will help turn our economy around, create jobs, and provide relief to the families of our country.

GWEN IFILL: Senate Majority Leader Harry Reid said the quick action on the deal, which heads toward a floor vote later this week, was essential.

SEN. HARRY REID (D-NV), Senate Majority Leader: The middle ground we’ve reached creates more jobs than the original Senate bill and spends less than the original House bill. This bill creates 3.5 million jobs.

More than one-third of this bill is dedicated to providing tax relief for middle-class families, cutting taxes for 95 percent of American workers. We all agreed we cannot short-change our future, which is why we’re giving states the critical help they need to strengthen education and invest in our communities.

GWEN IFILL: The House version would have cost $819 billion, the Senate version $838 billion. The lower figure agreed to today was reached, in part, by: removing a Senate-passed provision that would provide a $15,000 tax credit for the purchase of a home; trimming back the president’s “Making Work Pay” tax credit from $500 to $400 for individuals and from $1,000 to $800 for married couples; and cutting back planned spending education and health care subsidies.

But the compromise added some spending back into the pot, as well, including: $5 billion for aid to state governments, up to a total of $44 billion, and $6 billion for school construction, to be spent on repairs and modernization.

SEN. MAX BAUCUS (D), Montana: The bottom line, given the millions of jobs lost, millions of Americans in foreclosure, the recession in this country and in the world, this is the right thing to do.

GWEN IFILL: President Obama has been hammering Congress to reach agreement, taking his appeal to friendly audiences in Indiana, Florida, and, today in Virginia, where he announced that one manufacturer promised to call off some of its 22,000 recently announced job cuts once the measure is signed into law.

BARACK OBAMA, President of the United States: Caterpillar, which manufactures the machines used in this project, has announced some 20,000 layoffs in the last few weeks. And today the chairman and CEO of Caterpillar said that, if the American Recovery and Reinvestment Plan passes, his company would be able to rehire some of those employees.

GWEN IFILL: Three Senate Republicans, Collins, Olympia Snowe, and Arlen Specter, played a key part in negotiations. But today’s compromise failed to sway many House Republicans.

REP. JOHN BOEHNER (R-OH), House Minority Leader: But I’ve got to tell you, from everything that I’m hearing about the so-called deal, I’m very disappointed, very disappointed because it won’t do what Americans expect that it will do, and that is create and preserve jobs in our country. It appears that they’ve made a bad bill worse by reducing the amount of tax relief for American families and small businesses and adding more wasteful Washington spending.

REP. ERIC CANTOR (R), Virginia: From all that I hear, we are going to be faced with the final stage of the stimulus bill process largely kept in the dark. And my question is, what is the majority trying to hide by never allowing any ventilation of ideas, any discussion of what we have brought forward as the Republican vision to stimulate this economy?

GWEN IFILL: The House and Senate conferees began hashing out the negotiated details this afternoon.

Partisan differences on stimulus

Amy Walter
The Hotline
[President Obama] talked a lot in this election -- and the president continues to talk a lot -- about bipartisanship. But the fact is [...] there aren't many people to reach out to anymore.

GWEN IFILL: For more on the complicated policy and politics that led to today's deal, I'm joined by Amy Walter, editor-in-chief of the Hotline, National Journal's political daily.

Amy, this was supposed to be a slam dunk for this administration. He was supposed to come into office, immediately have this bill on his desk, and sign it. What took so long to get to this point?

AMY WALTER, Editor-in-Chief, The Hotline: Well, it is quite remarkable, though, how quickly it did turn around. We're only in week there officially of his presidency.

GWEN IFILL: True. True.

AMY WALTER: So it is -- but I think it was also that we were talking about 80 votes, right, we were going to get 80 votes out of the Senate. This was going to be bipartisan, Democrats, Republicans both coming together and doing this.

The reality is, is what you saw in these competing press conferences here, is that Republicans basically saying, "This is not what we thought we agreed to when we were talking about the broad outlines of a stimulus package. The thing's too heavy on spending; there's not enough tax cuts. We don't think it's going to work." Democrats think it's going to. Let's see how it plays out.

GWEN IFILL: You know, there are those who would have looked at the outcome of this last fall's election mandate for the president and democratically controlled House and Senate and say, "Wow, fine, he can do whatever he wants." Instead, the kingmakers in this -- or queenmakers, I guess -- were Sens. Collins and Snowe and Sen. Specter, Republicans.

AMY WALTER: That's right. I mean, he could have done that. Right, I mean, in the House, certainly he didn't get any Republicans, and he didn't need them. In the Senate, yes, he did need to get Republicans to be able to get to 60. You know, he ultimately got 61.

And this is sort of the interesting part. He talked a lot in this election -- and the president continues to talk a lot -- about bipartisanship.

But the fact is -- and you and I talked a lot about this during the campaign -- there aren't many people to reach out to anymore. Specter and Snowe and Collins are just basically the last of the moderates left in the Senate. The Democrats' ability to win control of the House and the Senate came at the expense of other moderates.

There was a time when he might have been able to get four or five or six Republicans who sat in marginal states or were considered moderate. In the House, there would have been more people to go to.

The reality is, when you have 58 of your own members and very few moderates left, this is how a lot of these bills could end up playing out, which is why so many Democrats were focused in the last election on getting to 60, so that they could, indeed, bypass having to talk to the other side.

GWEN IFILL: But this isn't all politics. When you look closely at this bill, there's a lot about philosophy, about how one stimulates the economy...

AMY WALTER: Exactly.

GWEN IFILL: ... and whether this was the right -- give me some examples about how this played out in a way that was really about policy as much as politics?

AMY WALTER: Well, and I think that's very -- that's a very fair statement, because you're going to have both sides that are trading -- they're trading arguments now about people aren't being nice, we're getting shut out of process, this is -- but the bottom line is, you have two parties -- right, that's why we have the two-party system here -- that have very different ideas about how to get things done.

Republicans fundamentally -- and, remember, there are not many of them left. There are only 178 Republicans left in the House -- these are very conservative Republicans who do believe -- and they're very frustrated -- that the party lost their way over the last few years, the party spent too much, was complicit in the earmarks, created big entitlement spending, and they want to get back to what they see as the core Republican values of fiscal responsibility. So that's where they're coming from.

Democrats, who've been locked out for eight years, saying, no, the way to get stimulus spending is doing the stuff that we haven't done in a long time, which is reinvesting in infrastructure, reinvesting in middle-class tax cuts. And, you know, in the end, somebody's going to be right and somebody's going to be wrong.

GWEN IFILL: Coming down to even how you build a school. Do you build a school by giving the money to the governors or do you build a school by giving the money to the school...

AMY WALTER: Giving money to the state.

GWEN IFILL: ... to the state, yes, exactly. So now we -- the president has to expend some of his muscle on this. Did he expend a lot?

AMY WALTER: Well, it's interesting because he did spend a great deal of time out on the trail. But it's not as if he was -- you know, his popularity hasn't moved anywhere since this process started. The popularity of the actual stimulus bill, though, you saw starting to drop.

And it was the longer the actual legislation was out there, you started to see public support for it, you know, start to fade. His overall popularity, still very big. The bully pulpit is a big deal when you have a 60 percent approval rating and you can dominate the airwaves.

GWEN IFILL: On the other hand, members of the House and the Senate do not have that same level of approval.

AMY WALTER: That's right.

Winners and losers

Amy Walter
The Hotline
There are a lot of Republicans worried about that, that if they vote in support of a bipartisan bill, that they're going to be primaried by more conservative Republicans.

GWEN IFILL: So who are the losers and winners, if you look at Nancy Pelosi, the House speaker, Harry Reid, the majority leader, and then the Republicans, like John Boehner, who we just saw on the other side?

AMY WALTER: Well, this will be interesting. You talked about the moderates. Already, Arlen Specter is getting a great deal of grief from Republicans back in his home state saying, "You've abandoned this party."

There are people talking about primarying him. Again, there are a lot of Republicans worried about that, that if they vote in support of a bipartisan bill, that they're going to be primaried by more conservative Republicans.

You know, for Pelosi and Reid, Pelosi clearly is the target right now for Republicans. You heard that in that press conference of the Republican leadership saying, "We've been cut out," trying to make, really, Pelosi the bad guy in this progress, that, "We can work with Barack Obama. We can't really work with House leadership because they're ruling with an iron fist and they're not allowing us to be part of the process."

But those arguments very rarely work with the American public. I mean, they see the leader of the party is Barack Obama, period. This is his bill. And that's who they're looking for.

GWEN IFILL: And timing, in the end, this had to get done...

AMY WALTER: That's right.

GWEN IFILL: ... if not today, this week.

AMY WALTER: That's right. And now it's done, and we move forward. And the real question is, when do voters think that they want to see an outcome? We keep talking about, well, who's a winner and the loser? When do voters really want answers?

When we did polling on this a little while ago, what we found is 60-some percent, almost 70 percent of voters thing that this recession is going to last two, four, or more years. So they believe this is a president who has inherited a really bad economy. They do not blame him, obviously, for this.

And it looks like, at this point, they're giving him that room to sort of let this play out. I don't know if they're going to feel that way in two years if, indeed, there aren't 3.5 million new jobs, if we're not seeing recovery happening across the board. So we'll wait and see.

GWEN IFILL: OK, Amy Walter of the Hotline, thanks a lot.

Geithner asked for more details

Timothy Geithner
Treasury Secretary
I do not want to compound the mistakes of the last 12 months, where things were rushed out before they were ready.

JUDY WOODRUFF: Meanwhile, the Obama administration's plans to aid banks ran into more skepticism today at a Senate hearing. And a House committee called bank leaders to account for how they spent the money they already received.

Jeffrey Brown reports that part of the day's economic news.

JEFFREY BROWN: Treasury Secretary Timothy Geithner faced a second day of demands for details on the revised rescue program, this time from the Senate Banking Committee.

Republican Jeff Sessions of Alabama pointed to yesterday's stock market plunge, which came after Geithner's announcement.

SEN. JEFF SESSIONS (R), Alabama: The market has made clear that certainty and stability are commodities of great demand. And I think many of us were looking forward to a plan that could be presented in a straightforward, clear, and detailed way.

Unfortunately, that is not what we received yesterday. At least that's not what the markets and the country perceived they heard. And the country's financial sector needs a better understanding of how the Treasury intends to move forward with this economic recovery. Congress, as the people's representative, must evaluate that plan, I think, and either approve it or disapprove it.

JEFFREY BROWN: Geithner said specifics could come in the next several weeks, once the Treasury Department can assess the financial sector's overall needs.

TIMOTHY GEITHNER, Treasury Secretary: I do not want to compound the mistakes of the last 12 months, where things were rushed out before they were ready and strategy had to be adapted because of that. It's very important to me we do that.

And if that means there is going to be disappointment with the level of detail until we get it right, I will live with that disappointment, because it is better than the alternative.

JEFFREY BROWN: Still, some key aspects of the plan, including its ultimate cost, remain uncertain. Roughly $350 billion is left from the original $750 billion bank rescue program, the so-called TARP.

Yesterday, Secretary Geithner presented public and private initiatives that could total $1.5 trillion to $2.5 trillion.

At today's hearing, Republican Lindsey Graham of South Carolina wondered how much a forthcoming housing initiative alone will cost.

TIMOTHY GEITHNER: I can't tell you at this point, but if we think there's a good case for doing it, we're going to come tell you how we're going to do it.

SEN. LINDSEY GRAHAM (R), South Carolina: OK, good. So you have no clue.

JEFFREY BROWN: The committee's Democratic chairman, Kent Conrad of North Dakota, agreed with Geithner that some patience was in order, but he also cautioned that Congress won't wait long for the hard numbers.

SEN. KENT CONRAD (D), North Dakota: I'm not going to pressure you today, but I want to give you a fair heads-up that this committee -- it is incumbent that you very soon help us understand if additional funds are going to be needed and in what amount.

House grills banking CEOs

Lloyd Blankfein
CEO, Goldman Sachs
It is abundantly clear that we are here amidst broad public anger at our industry. Many people believe -- and, in many cases, justifiably so -- that Wall Street lost sight of its larger public obligations.

JEFFREY BROWN: Over on the House side today, the CEOs of eight major financial institutions appeared before Democrat Barney Frank's Financial Services Committee.

REP. BARNEY FRANK (D), Massachusetts: I urge you strongly to cooperate with us, not grudgingly, not doing the minimum, but understanding that there is a substantial public anger, and alleviating that public anger, not with mumbo-jumbo, but with reality, is essential.

JEFFREY BROWN: The banks represented were Goldman Sachs; Bank of America; Citi; Morgan Stanley; JPMorgan; Bank of New York; State Street; and Wells Fargo. Combined, these institutions have received $165 billion so far in federal rescue funds.

The executives insisted they had used the money to begin lending more, despite criticism they've been hoarding the funds. But they also struck a note of contrition.

Lloyd Blankfein runs Goldman Sachs, the investment bank which converted into a bank-holding company to qualify for the program.

LLOYD BLANKFEIN, CEO, Goldman Sachs: It is abundantly clear that we are here amidst broad public anger at our industry. Many people believe -- and, in many cases, justifiably so -- that Wall Street lost sight of its larger public obligations and allowed certain trends and practices to undermine the financial system's stability.

JEFFREY BROWN: The pay packages the CEOs receive have also been a cause of widespread outrage. The Obama White House has ordered executive pay capped at $500,000 for companies receiving assistance.

REP. BARNEY FRANK: But at your level, again, why do you need bonuses? Can't we just give you a good salary or give yourselves a good salary -- you're in charge of that -- and do the job? This notion that you need some special incentive to do the right thing troubles people.

JEFFREY BROWN: John Mack heads up Morgan Stanley.

JOHN MACK, CEO, Morgan Stanley: To answer your question specifically, at least at my level, and I think my colleagues here would say the same, we love what we do. If you gave me no bonus in the best year, I would still be here.

JEFFREY BROWN: Vikram Pandit is CEO of Citigroup, which received the largest single amount, including more than $300 billion in loan guarantees from the Federal Reserve.

In spite of criticism to the contrary, he said Citi has used some of the aid to help thousands of people stay in their homes.

VIKRAM PANDIT, CEO, Citigroup: Since the start of the housing crisis in 2007, we have worked successfully with approximately 440,000 homeowners to help them avoid foreclosures. We're also adopting the FDIC's streamlined model for loan modification programs. In the last year, we've kept approximately four out of five distressed borrowers in their homes.

JEFFREY BROWN: Some members of the committee were unimpressed by what they'd heard.

REP. MICHAEL CAPUANO (D), Massachusetts: Start loaning the money that we gave you. Get it on the street. And don't say, "Oh, well, we're not using that money for bonuses." Come on.

REP. GARY ACKERMAN (D), New York: Sometimes some of us think that we're living in two different worlds. We listen to the group of you giving us very calm assurances that everything is OK, under control, and there are no problems.

JAMIE DIMON, CEO, JPMorgan Chase: Every person up here believes the government absolutely has the right to ask the questions about the TARP money, what we're doing, that we're doing things in the best interest of the company.

REP. GARY ACKERMAN: Why didn't we get answers? Why didn't the press get answers? Why didn't anybody get answer?

JAMIE DIMON: I can't explain with the press. I'm telling you that everyone here has said that and is doing everything they can to do it right.

JEFFREY BROWN: The question of doing it right promised to continue dominating debate in the days ahead over the revamped rescue effort.