U.S. Senators convened for a rare weekend session Saturday to continue debating President Barack Obama's re-tooled economic recovery plan that's headed for a key vote on Monday.
The plan, which was trimmed by more than US$100 billion on Friday after lobbying by Senators on both sides of the floor, will likely pass in the upper chamber. However, it could face resistance when it's sent back to the House of Representatives, where many Democrats are unhappy with the cuts.
Jon Kyl of Arizona, the second-ranked Republican in the Senate, said key elements of Obama's plan, such as the $500 tax cut for most workers, would do little to boost the economy.
The cut is similar to the $600 rebate cheques the previous Republican government sent out last year, which failed to have an impact.
"It was not effective last year," Kyl said. "There's nothing to suggest it's going to be any more effective this year to stimulate the economy."
The ongoing debate came a day after a small group of Democrats and moderate Republicans, led by Republican Senator Susan Collins of Maine and Democrat Ben Nelson of Nebraska, secured the changes to the recovery plan.
The group had been seeking even more cuts to programs that they felt would not immediately create a high number of jobs.
However, White House Chief of Staff Rahm Emanuel stepped in during the negotiations to urge Democrats to make a final set of concessions.
The Senate is expected to vote on the plan early next week.
While some House Democrats may be unhappy with the new terms, the urgency to move the recovery plan forward means the House will be hard-pressed to continue stalling the legislation.
$827 billion
The cost of the bill now sits at $827 billion, which includes Obama's tax cut of up to $1,000 for working couples. Also included in the bill is a $15,000 tax credit for homebuyers, as well as a credit for the purchase of a new car.
One major reduction is a $40 billion cut from the so-called "fiscal stabilization fund" for state governments.
As well, a plan that would have subsidized two-thirds of the cost of purchasing health care for the unemployed was reduced to a 50-per-cent subsidy.
Some of the programs that were spared the axe include $14 billion to increase the maximum for college Pell Grants by $400 to $5,250. As well, aid to local school districts for special education and the No Child Left Behind Law will remain intact.
Senate Majority Leader Harry Reid, D-Nev., had wanted just $63 billion cut from the spending bill.
While he called the cuts an imperfect compromise, he gave the plan his blessing.
"But at the end of the day, we are passing a bold and responsible plan that will help our economy get back on its feet, put people to work and put more money in their pockets," Reid said.
The Democrats have a 58-41 majority in the Senate, but need 60 votes to pass the bill and move it on to a final vote.
Collins has pledged to vote for the legislation, as have Republican Senators Arlen Specter of Pennsylvania and Olympia Snowe of Maine.
The tough negotiations took place as the latest American job-loss figures were released. The statistics showed that the U.S. economy shed 598,000 jobs in January, which pushed the national unemployment rate to 7.6 per cent.
Obama has said the plan should save or create about three million jobs and begin turning around the nation's economy by years' end.
In the meantime, the legislation provides immediate support to those hardest hit by the economic downturn, with funding for food stamps, unemployment insurance and health care.
However, it also contains infrastructure funds for highways and bridges, and funds for state governments to stave off cuts in services or tax increases.
With files from The Associated Press
