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Senate OKs leaner economic stimulus bill

Senate OKs leaner economic stimulus bill

WASHINGTON (CNN) -- The Senate approved a stripped-down $42 billion economic relief package on Friday morning, including provisions that would grant laid-off workers 13 more weeks of unemployment benefits and provide tax breaks to help businesses recover from the economic downturn.

The go-ahead comes just as the 26 weeks of unemployment benefits were about to expire for workers who lost their jobs after September 11, a situation that added urgency to its approval.

The vote of 85-to-9 came after a short debate in which some lawmakers complained that final approval seemed to be coming at a time when economists, including Federal Reserve Chairman Alan Greenspan, have said they believed the economy already is recovering on its own.

Before the vote, Sen. John Breaux, D-Louisiana, a key moderate, said, "A lot of people think the recession is over."

Another criticism was that the legislation did not include some provisions that proved to be stumbling blocks for Capitol Hill negotiators in recent months, such as expanding health-care benefits for the unemployed, or cutting income tax rates. Yet, in an election year when voters have expressed concern about the economy, the overwhelming sense was that even this stripped-down bill was better than no bill.

"We've got a choice here. It's either vote for this or try to amend it. And if we try to amend it, we're going to be back where we've been for the last five months. That is, doing a lot of talking and not much action. I regret that, but that's the situation we're faced with," said Sen. Max Baucus, D-Montana.

Immediately after the vote, Republicans held a news conference to claim victory for the bill's passage. The breakthrough came Thursday, when House GOP leaders decided to scale back their demands for a bigger package of tax cuts in order to reach a compromise.

"Finally, we are doing this morning in the Senate what we should have done probably six months ago," said Sen. Majority Leader Trent Lott, R-Mississippi, referring to previous efforts that were stalled because of opposition from the Democrats who control the Senate.

President Bush is expected to sign the legislation. "The president endorses this compromise proposal. It's a scaled-down stimulus package that includes the unemployment extensions that he has sought," White House spokesman Fleischer said. "He will sign it into law if it is sent to him."

Shortly before Thursday's House vote, Speaker Dennis Hastert, R-Illinois, told reporters the GOP leadership did not "wave the white flag" when it agreed to remove most GOP-sponsored tax relief provisions from the bill, leaving as its centerpiece a 13-week extension of benefits for the unemployed that Democrats fought to pass.

"We were broadly criticized by some, especially in the Senate," Hastert said. "We did not back up. We did not wave the white flag. We did not retreat. ... I think this is a good bill."

In fact, Hastert vowed the House would act on a tax package later this year. He declined to specify what might be in a new package but suggested that among other items, he would like to make permanent a recently passed temporary repeal of the inheritance tax.

GOP leaders decided to remove disputed provisions of the long-stalled economic stimulus bill when it became clear they could not get those measures through the Democratic-led Senate, where three previous House-passed stimulus bills died.

Besides the unemployment benefits extension, the bill offers tax breaks for businesses, creates a special tax status for lower Manhattan, and extends several expiring tax provisions. The bill passed by an overwhelming 417-3 vote after a short debate.

Missing from the legislation is health insurance assistance for the unemployed. Republicans proposed offering tax credits to unemployed workers to buy insurance. Democrats opposed the tax credits for philosophical and practical reasons. The issue became a major sticking point.

House Republican leaders had pushed a bill costing more than $100 billion that included corporate tax relief, a rebate for some low-income workers, an acceleration of the recently passed income tax reduction, and other provisions.

They changed course, in part, because many rank-and-file Republicans were concerned that unless some type of bill passed, they would appear insensitive to the needs of laid-off workers whose 26 weeks of unemployment benefits will soon expire.

Meanwhile, Senate Majority Leader Tom Daschle said Thursday he would have preferred the House pass a simple 13-week extension of unemployment benefits without other tax provisions, as the Senate did last month.

"Republicans in the House can't help themselves but to load up a bill. They just can't seem to bring themselves to do the right thing and pass a simple extension of unemployment benefits," said Daschle, D-South Dakota.

Despite his misgivings about the broader House bill, Daschle said he still feels it is important to get legislation with unemployment benefits to President Bush's desk.

CNN's Ted Barrett and Dana Bash contributed to this report.




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