Congressional Negotiators Weigh Economic Stimulus Options

WASHINGTON – As Democrats and Republicans battle out the remaining issues on an economic stimulus package, the chairman of the House tax-writing committee said he is holding out hope that a deal can be struck before House GOP leaders turn to Plan B.

On Tuesday, House Republicans were planning a vote on a second stimulus bill in an effort to pressure the Democratic Senate majority leader to agree to a compromise measure.

But House Ways and Means Committee Chairman Bill Thomas, R-Calif., who crafted the first bill that passed the House in October, said he hoped to come up with a deal with Senate leaders that would pre-empt the need to vote on the alternative bill.

He also said President Bush needs to be more involved in the process. Bush, who has been working the phones since the debate began, met with Republican and Democratic congressional leaders Tuesday at the White House.  He will also go to Capitol Hill Wednesday to press his case.

Back on Capitol Hill, House Speaker Dennis Hastert, R-Ill., said, "There is some room for negotiation," leaving open the possibility that negotiators could reach a deal on the original plan before resorting to the House GOP's alternative.

One key centrist, Democratic Sen. John Breaux of Louisiana, said House Republicans don't want "to do something they don't think can pass the Senate. I would just hope there has to be a way we can reach an agreement."

Thomas is trying to revive a $100 billion bill in stimulus provisions that forced Senate negotiations to break down over what percent of the bill should go to tax breaks versus aid to displaced workers. About 70 percent of the House bill was directed to corporate and personal tax breaks and incentives.

That bill passed on a narrow 216-214 vote but stalled in the Senate when Democrats refused to exclude additional health care assistance to unemployed workers. Senate Republicans were also leery of the $100 billion cost, preferring a number closer to the $75 billion range proposed by Bush. Senate Republicans, however, sought to include tax provisions for businesses opposed by Democrats.

Thomas said he is hopeful that a deal could be reached in the waning days of the congressional session but House Republicans, led by Majority Leader Dick Armey, R-Texas, are playing a tricky endgame in which they are preparing to pass a bill that would then enable the president to come up to pressure the Senate leadership to act.

A working draft of the House GOP bill — signed onto by Senate centrists — includes $33 billion for the unemployed and health care benefits for laid-off workers — an increase of more than $20 billion from the bill passed in October.

It also includes an acceleration of the reduction in the marginal tax of 27 percent to 25 percent, currently slated to be reduced in 2005; and a repeal of the alternative minimum tax payment. The repeal is not the retroactive repeal first sought by House Republicans.

Senate centrists said they agree to most of the House GOP provisions, though Senate Democrats had wanted a one-year entitlement provision, expanding eligibility for Medicaid, while Republicans wanted a 65 percent COBRA tax credit for health insurance, which will likely be the end result. Centrists were trying to keep the AMT out of the package, but it is still being negotiated.

Senate Republicans were said to be on board with the above provisions with the exception of Sen. Lincoln Chafee, R-R.I. The effort Monday was to drum up more support among Democrats. Democratic Sens. John Breaux of Louisiana, Ben Nelson of Nebraska and Zell Miller of Georgia were said to support the bill.

While the president is willing to deal on either of the bills, White House spokesman Ari Fleischer said Monday the president thinks passage of a second bill would add more pressure on the Senate leaders.

"Well, I think there's a real possibility it might help. It seems to be a rather centrist proposal and a positive idea, something that the president supports," Fleischer said.

Fleischer said Tuesday the president he hoped Congress would still be able to reach an agreement even if the Senate rejects the second House bill.

"The president does not want to give up. The president thinks it's too important to the unemployed and too important to the strength of the economy that he will go the extra mile this week to get an agreement."

Fox News' Julie Asher and Jim Mills contributed to this report.