In Economic Stimulus Deal, Some Winners, Some Losers

Now that the political tug of war over President Obama's stimulus plan has led to a tentative $789 billion agreement, the negotiations' winners and losers range from the recipients of hard currency to those trying to claim political currency from the process.

The bill's combination of roughly one-third tax cuts and nearly two-thirds spending incentives is aimed at putting money back in the pockets of consumers and businesses and creating millions of jobs. It also looks to accomplish some long-term goals, such as making the country more energy efficient and improving the nation's crumbling roads and bridges.

Of course, one of the biggest winners is the president, who scores a major legislative victory only a few weeks after taking office. Obama has staked his four-year term on the success of this package. If the economy recovers as a result, Obama's legacy will be defined by this package. If it fails, Obama himself admits there will be a new president four years from now.

On the flip side, Republican lawmakers may turn out to be winners. Most of them voted against the package, and in their largely unified opposition, they found an issue to galvanize the party after two consecutive dispiriting electoral defeats.

As for the three Republican lawmakers who broke ranks with their party to support the bill and in effect help get across the finish line, their performance remains hard to judge.

In the short run, moderate Republican Sens. Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania, were victorious in their effort to broker the deal. But these three defectors also have risked the political wrath of their fellow Republicans and some constituents.

States stand to gain help with their budget shortfalls and assure the viability of Medicaid and education programs.

Collins said the spending includes about $90 billion in increased federal matches to states to help pay for Medicaid, along with a $54 billion "fiscal stabilization" fund that states could use to build and repair schools and improve facilities at institutions of higher learning.

It's still debatable whether the stimulus package will get the economy back on track. Many leading economists have concluded that the stimulus alone may be insufficient to bring a quick turnaround for the economy.

Mark Zandi, chief economist at Moody's Economy.com, called for a larger package of spending and tax breaks and predicted that unemployment could top 9 percent next year, up from the current 7.6 percent, even if an $800 billion package is enacted. Nobel laureate economist Paul Krugman also contends that $800 billion will fall short of filling the gap left by projected reductions in consumer and business spending.

Obama has also acknowledged that the stimulus measures are only "one leg of the stool" needed to stabilize the economy. Spending initiatives and tax cuts, he has said, must be combined with the ongoing massive effort to restore confidence and integrity to financial markets, get credit flowing again and right the collapsed housing market.

Other highlights of the bill includes:

Education: The package has some $11.5 billion to support the IDEA program for special education. There's another $10 billion for a federal program to help low-income students.

Energy: The package includes funds to modernize the electrical grid -- in part by incorporating renewable energy resources -- and to make federal buildings more energy efficient and help low-income households weatherize their homes.

Health: The plan includes subsidies to allow people who are laid off to purchase health insurance through the federal COBRA plan. There is also money to support hospitals seeking to modernize health information technology.

Infrastructure: The infrastructure section of the package includes funds for building and repairing highways and bridges, expanding transit systems, upgrading airports and rail systems and building and repairing federal buildings -- with the focus on making them more energy efficient. Funds are available for clean water projects, cleanup of environmental waste areas and nuclear waste cleanups.

Money devoted solely to transportation infrastructure reaches almost $50 billion. Collins said that when all the infrastructure projects for roads, sewers, energy and electricity transmission are added up, it will reach about $150 billion.

The package includes money to bring broadband Internet service to under-served areas.

Other highlights: The plan also supports National Institutes of Health research and contributes to programs in the departments of defense, homeland security, veterans affairs and state.

Some of the tax breaks in the bill include:

Obama's signature "Making Work Pay" tax credit for 95 percent of workers, though negotiators agreed to trim the credit to $400 a year instead of $500 -- or $800 for married couples, cut from Obama's original proposal of $1,000. It would begin showing up in most workers' paychecks in June as an extra $13 a week in take-home pay, falling to about $8 a week next January.

There is also a $70 billion, one-year fix for the alternative minimum tax. The fix would save some 20 million mainly upper-middle-income taxpayers about $2,000 in taxes for 2009.

Infrastructure spending will offer a big boost in job creation according to the Federal Highway Administration, which has estimated that every $1 billion the federal government spends on infrastructure projects translates to 35,000 jobs. Collins put the total infrastructure spending -- including highways, mass transit, environmental cleanups and broadband facilities -- at $150 billion. Do the math and that translates into more than 5 million jobs, based on the highway administration's assumptions.

Senate leaders have offered their own estimate -- they said Wednesday that the total stimulus package will sustain some 3.5 million jobs.

Lawmakers say most of the projects could be up and running within 90 days, although it could take somewhat more time in northern states with longer winters. Highway construction groups have estimated that there are thousands of projects that could be started within that 90 days.

The Associated Press contributed to this report.