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Senate, House Begin Talks on Stimulus

Senate Majority Leader Harry Reid has announced agreement on an economic stimulus bill. He says the legislation should create 3.5 million jobs once President Barack Obama signs it into law and it takes effect. Video by AP

The original Senate bill provided a similar level of funding, but moderates protested the cost as well as the principle of too prominent a federal role in education policy. Collins, one of the lead GOP negotiators, said of the construction provisions: "I do not support the establishment of a new federal school construction program, because school construction traditionally has been a state and local responsibility."

The bill includes "vast sums" for other education programs, Collins noted, including $13 billion for special education and $13 billion for Pell grants.

Sen. Ben Nelson (D-Neb.), who worked with Collins in crafting the final Senate legislation, said "everybody understands," including Reid, that vital Senate votes will be lost if the bill is "materially altered." He defended the compromise from the criticism of House Democrats targeting the Senate's stance on school construction funding, along with its decision to cut in half aid to state governments to help avoid layoffs of teachers, police and firefighters -- measures that now total $39 billion in the Senate plan.

Nelson said school districts would still receive $66 billion from the stimulus plan, while an additional $40 billion would be directed to the Education Department in an annual spending bill to be approved by early March. Senior Democratic aides said one way for negotiators to restore school funding, without the specificity that Collins and Nelson oppose, would be to add money to more loosely defined state accounts.

A similar conflict is brewing over Medicaid spending, including how to distribute $87 billion that both bills include, but with different formulas for small and large states. If the Senate version favoring small states is altered, warned Nelson, a former Nebraska governor, "that's a deal-breaker."

Republicans continued to protest the bill's size and content, suggesting that support in the House and Senate is unlikely to grow on final passage.

"We all know this is an emergency. We're all in favor of taking some kinds of action," said Senate Minority Leader Mitch McConnell (R-Ky.). "But I do think it's important to focus on the larger question of: Where are we going to leave the country in two years if we take all of these steps? We will have made a dramatic move in the direction of, indeed, turning America into Western Europe."

Senate Finance Chairman Max Baucus (D-Mont.), who will help negotiate the final bill, predicted that it will be closer to the Senate version than the House's. "That's where the votes are," he said. Senate Appropriations Chairman Daniel K. Inouye (D-Hawaii), another negotiator, however, called the differences between the two bills "humongous."

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