Senators reach tentative deal on Obama economy bill

No details were immediately available and there appeared to be some confusion even among senators about the price tag as floor debate continued into the early hours.

The agreement capped a tense day of backroom negotiations in which Senate majority leader Harry Reid, joined by White House chief of staff Rahm Emanuel, sought to attract the support of enough Republicans to pass the measure.

Democrats hold a 58-41 majority in the Senate, including two independents, but it takes 60 votes to pass the bill because it would raise the government deficit.

“The American people want us to work together. They don’t want to see us dividing along partisan lines on the most serious crisis confronting our country,” said Senator Susan Collins, one of two Republican senators who signalled support for the bill.

Any agreement would mark a victory for the new president and would keep Democratic leaders on track to fulfil their promise of delivering him a bill to sign by the end of next week.

The deal on the stimulus measure caps a difficult week in which Mr Obama saw some of his key appointments delayed or derailed because of tax problems.

He had earlier stepped up the pressure on Congress as a new jobs report posted the worst results in a generation – 598,000 positions lost in January and the US unemployment rate rising to 7.6% – the highest since September 1992. An estimated 3.6 million Americans have lost their jobs since the recession began.

“These numbers demand action. It is inexcusable and irresponsible for any of us to get bogged down in distraction, delay or politics as usual while millions of Americans are being put out of work,” Mr Obama said. “Now is the time for Congress to act.”

Since his January 20 inauguration, the president has repeatedly reached across the aisle to resistant Republicans as the stimulus plan has wound its way through the Democratic-controlled Congress.

But even as he continued to make gestures of bipartisanship, he has sharpened his tone as he seeks to sell the pricey package to both the public and Republican politicians who want less spending and more tax cuts.

Mr Obama plans to take his message outside Washington next week, participating in town hall-style meetings in two cities that are struggling – Elkhart, Indiana and Fort Myers, Florida, on Monday and Tuesday to tell people what his stimulus plan would mean for them.

While the Democrats’ majority in the House of Representatives allowed them to pass their $819 (€633bn) version of the stimulus package even though they won no Republican support, Senate passage had proved far more difficult.

If the plan passes in the Senate, both versions would have to be reconciled and more changes could still come.

At its core, the legislation is designed to ease the worst economic recession in generations, and combines hundreds of billions of dollars in new spending with tax cuts. Much of the money would go for victims of the recession in the form of welfare, unemployment compensation and health care.

There are funds, as well, for highways and bridges, and it also includes a “Buy American” protectionist measure for iron and steel that has drawn strong criticism from major US trading partners including Japan, Australia and Canada.

But the administration also decided to use the bill to make a downpayment on key domestic initiatives, including creation of a new health technology industry and so-called green jobs designed to make the country less dependent on imported oil.

And Democrats in Congress decided to add additional huge sums for the states struggling with the recession, as well as billions more for favoured programmes such as parks, the repair of monuments in government cemeteries and health and science research.

Democratic leaders in Congress have confidently predicted they would have a bill to the president’s desk by mid-February, but Republicans, freed of the need to defend former president George Bush’s policies, have pivoted quickly to criticise the bill for its size and what they consider wasteful spending.