Senate Economic Recovery bill drops key House provisions; Conferees working to produce final package

On February 10, the U.S. Senate passed its version of the Economic Recovery and Reinvestment Act by a vote of 61 to 37. Minnesota Senator Amy Klobuchar voted for the final bill. Passage of the bill was assured when three moderate Republican senators from the Northeast, Sens. Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania agreed to vote for a modified bill that trimmed over $100 billion in provisions passed by the House last week. Senators, however, added several tax provisions to their version that brought the final price tag of the Senate bill up to $838 billion. The House-passed bill was $819 billion.

Some of the biggest cuts in the Senate bill included $40 billion in state fiscal stabilization, $16 billion for school modernization and $1.2 billion for retrofitting Section 8 public housing. For a list of other items that have been reduced or eliminated in the Senate bill, visit

Tax provisions in the Senate-passed bill include around $70 billion to exclude more taxpayers from the Alternative Minimum Tax (AMT) and $35.5 billion for a new tax credit of 10% of the value of a new or existing home purchase, up to $15,000. The House also included a tax credit for home purchases, but limits the tax credit to $7,500 for first-time homebuyers who purchase their homes before July 1, 2009, costing just $2.6 billion. The Senate also includes a new $11 billion tax deduction for interest payments and sales taxes paid on new cars purchased from November 2008 through 2009. The deduction would be limited to individuals with incomes under $125,000 or couples making less than $250,000.

Following passage of the Senate bill, conferees were quickly appointed to resolve differences between the two bills. Any final package will probably have to win the support of Sens. Collins, Snowe and Specter as well as all Senate Democrats in order to pass with a filibuster-proof 60-vote margin. Many Democratic House members are looking to restore some of the education and infrastructure cuts made by the Senate by scaling back some of the Senate’s tax provisions, such as the AMT “fix,” the new tax credit for homebuyers, and the new tax deduction for interest and sales taxes paid on new car purchases. But Sens. Collins, Snowe, Specter and Democratic Sen. Ben Nelson have warned that any final bill with a price tag above $780 to $800 billion would prompt them to vote against a final package.

With the President’s Day deadline looming, negotiators have reportedly agreed to a $790 billion compromise package, although details have not yet been released. A conference report is expected to go back to the House and Senate for a final vote this weekend and the President hopes to sign the bill into law on Monday, President’s Day.

-Steve Francisco

About Steve Francisco

Steve Francisco is the former federal policy analyst for the Minnesota Budget Project.
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