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ECONOMY: Congress set to pass stimulus bill after leaders strike deal on $790B measure

Alex Kaplun, Ben Geman, Katherine Ling and Dan Berman, E&E reporters

The House and Senate could vote as early as today on an $790 billion economic stimulus bill, handing President Obama his first major legislative victory.

The conference report includes billions of dollars for renewable energy and energy efficiency programs, climate change and other science research, water and transportation infrastructure projects, among other issue areas, according to a summary from the office of House Speaker Nancy Pelosi (D-Calif.).

Party leaders moved with unusual haste over the last two days to come to an agreement on the mammoth spending package, and leadership and a key group of moderate senators assured reporters the conference agreement will clear both chambers. "There is an agreement that will get 61 votes -- that's the bottom line," Senate Finance Chairman Max Baucus (D-Mont.) told reporters yesterday.
The House has already approved a rule that would allow it to pass the legislation today and Baucus said the Senate could follow suit later this evening, adding that he did not expect Senate Republicans to try to slow the process.

Though the fight over the bill was perhaps more fierce and perhaps longer than top Democrats had anticipated, it also allows Obama to tout a significant legislative victory just three weeks after taking office.

"[It's] a plan that will provide immediate tax relief to families and businesses, while investing in priorities like health care, education, energy, and infrastructure that will grow our economy once more," Obama said in a statement last night. "I'm grateful to the House Democrats for starting this process, and for members in the House and Senate for moving it along with the urgency that this moment demands."

Renewable project grants make the cut
The bill includes a program that provides grants that wind, solar and other renewable project developers can use in lieu of federal tax credits that have been a major source of project financing.

The renewable energy sector had lobbied hard for such direct payments. They said that tax credits are not a useful financing method during the economic downturn, when would-be project funders lack the tax liability to make use of the incentive. Also, the financial crisis has pushed banks and other renewable project backers to the sidelines, prompting the industry to seek new funding.
According to Pelosi's office, the conference report includes grants of up to 30 percent of the cost of building new projects "to address current renewable energy credit market concerns." It was not clear at press time whether the grant provision was altered at all from the version that was in the stimulus bill the House initially passed.
Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) had criticized that measure, arguing it put taxpayers at risk, and had vowed to seek changes in the conference talks (E&ENews PM, Feb. 3).

The bill's overall renewable energy and energy efficiency tax title is $20 billion over a decade, according to the House summary. It includes a three year extension of the production tax credit for wind projects. The incentive had been scheduled to expire at the end of this year but now may be claimed for projects placed in service before the end of 2012. It also extends the tax credit for three years, through 2013, for biomass, geothermal, hydropower, landfill gas, waste-to-energy, and marine renewable power projects, according to the House summary.

Other tax provisions include an extension of credits for making energy efficiency improvements to existing homes by buying efficient furnaces, windows and other equipment. The House and Senate versions of the bill had extended these credits through 2010, increased the credit level to 30 percent, and replaced dollar caps on the amount of credits available for specific equipment with an aggregate cap of $1,500 on combined purchases.

The conference bill also includes tax credits for investing in the manufacture of equipment used in various advanced energy projects, such as renewable power. The manufacturing tax credit was in the Senate-passed version of the bill but not the House measure. Other provisions include additional clean energy renewable bonds and expanded credits for purchasing plug-in hybrid vehicles.
About $30 billion of direct spending will go to support energy efficiency, renewable energy, smart grid technology to make the grid more reliable and efficient, and advanced electric battery research programs, all of which will create 500,000 jobs according to Pelosi's office.

Renewable energy and transmission received $13.9 billion in loan guarantees, according to the Associated Press, which is higher than either version of the bill previously had.

The fate of the $50 billion in loan guarantees for all advanced technologies that reduce greenhouse gas emissions, including nuclear energy, present in the Senate bill could not be confirmed, although an anti-nuclear group, Beyond Nuclear, said it had been cut. The provision, included in the Senate version, could increase the cap on loan guarantees for advanced low-carbon technology by $50 billion, more than double the current loan guarantee cap of $38 billion, and would stay applicable to advanced "clean energy" technology as defined in the 2005 Energy Policy Act, which includes nuclear, renewable energy, biofuels and coal with carbon capture and sequestration.

The energy efficiency measures included $5 billion in weatherization assistance -- nearly $2 billion more than the Senate version -- but $4.5 billion to make federal buildings "green" -- more along the lines of the Senate measure.

The provisions address Obama's concerns voiced in his press conference Monday by including about $6.3 billion for increasing energy efficiency in federally supported housing programs.
Funding for various conservation programs is seen as vital to advocates of combating climate change, who see energy efficiency providing the large opportunities, especially in the near-term, for emissions reductions while renewable energies and other technologies scale up. "The cheapest set of reductions are clearly going to be the result of energy efficiency," said Dan Reicher, director of climate and energy programs at Google, in an interview yesterday at an energy conference in Houston.

The House won a battle for $400 million for the Advanced Research Projects Agency for Energy (ARPA-E) program, designed to bring together the greatest minds from industry, academia and government "to pursue high-risk, high-reward research." The Senate bill included no money for ARPA-E.
The bill also includes $1.6 billion for the Energy Department's Office of Science. The program is the single largest supporter of basic physical sciences research in the United States, providing more than 40 percent of total funding. It oversees the nation's research programs in climate science, advanced computing, biofuels, high-energy physics, nuclear physics and fusion energy sciences (E&E Daily, Feb. 4).

For climate change, the conference agreement provides $400 million for NASA climate research, also even with the House number. The Senate bill would have provided an additional $100 million.

NASA is the largest funding source for climate research because of its satellite monitoring programs. In recent years, though, the agency has struggled because of budget cuts, and competition from the space flight program has caused a decline in earth science spending.
In 2007, the National Academy of Sciences warned that belt-tightening at NASA and the National Oceanic and Atmospheric Administration, the other primary climate research agency, had put the United States' ability to monitor climate change and severe weather "at great risk" (ClimateWire, Jan. 16).

One of the Senate moderates who helped move the bill, Sen. Susan Collins (R-Maine), said the final agreement actually slightly boosted transportation infrastructure spending from the Senate level, bumping the bill to $49.6 billion from $46 billion.

The difference appeared to be the result of a major boost in funding for high-speed rail, with the conference agreement allocating $8 billion for the initiative. The original Senate bill contained $2 billion for the program while the House version had zero.

Other than that change, the agreement sticks relatively close to the levels included in the Senate version of the stimulus package.

The bill provides a total of $29 billion for road and bridge construction, with a requirement that states have to obligate at least half of those funds within 120 days. Besides the $8 billion for high-speed rail, the bill also provides another $8.4 billion in funding for transit programs.

Additionally, the legislation provides a total of $18 billion for clean water, flood control and environmental restoration projects.

A long day
The agreement came at the end of a hectic day in which Senate Majority Leader Harry Reid (D-Nev.) and a group of moderates announced the deal even before many top House Democrats had a chance to be briefed on the agreement, forcing the postponement of a planned House-Senate conference to sign off on the legislation.
"Like any negotiations, this involved give and take, and if you don't mind my saying so, that's an understatement," Reid told reporters. "The middle ground we've reached creates more jobs than the original Senate bill and spends less than the original House bill."
But shortly after that pronouncement, senators were forced to postpone the conference meeting for two hours as Reid and Pelosi met in the speaker's office to hash out a final deal on the level of funding for school construction, a major issue of contention between the two chambers.

Pelosi said the two-hour delay was worthwhile. "We had to make sure that the investments in education were there," she told reporters. "We've been working on this for a very, very long time and it was always viewed that we would have a target for the conference, but that we would not go in before we were ready."
The dispute seemingly threw some of the lawmakers closely involved on the negotiations on the Senate side for a loop.
"There was general agreement," Sen. Ben Nelson (D-Neb.), one of the moderates involved in negotiating the final bill, told reporters moments after the conference committee was postponed. "If we didn't have an agreement, then there wouldn't have been a news conference."

Nelson was one of several lawmakers at the center of the wheeling and dealing -- part of a small group of Senate moderates from both sides of the aisle who seemingly held the bill's fate in their hands. The group had insisted that the final product come in at under $800 billion and closely resembled the Senate version -- two goals that were met in the negotiations.

As Reid announced the agreement, he was flanked by many of the moderates whose votes allowed for the Senate package to move and who held significant sway over whether any conference agreement would get Senate approval, including Nelson, Collins, and Sens. Olympia Snowe (R-Maine), Arlen Specter (R-Pa.) and Joe Lieberman (I-Conn.).

"We think have made the right choices in this legislation; it's a jobs bill, and today you might call us the jobs squad," Nelson said.
The moderates said the biggest stumbling block in achieving a deal was finding a way to push the legislation below the $800 billion figure -- $50 billion less than the version passed by the Senate on Tuesday. And even after the final deal was announced, virtually everyone involved said the legislation was far from perfect but that the economic crisis required immediate action.

"Did I agree with some of the things they made us swallow? No I didn't," Reid said of the requirements pushed by the moderates. "But that's the way the Senate works."

Meanwhile, Republicans used last night's conference meeting to again criticize Democrats for moving a bill through a process that prevented bipartisan cooperation. House Appropriations ranking member Jerry Lewis (R-Calif.) in particular complained that the bill was brought to conference even as most members had yet to see the legislation.

"This is where we are supposed to be negotiating this bill ... and this is not why we're here tonight," Lewis said.

But Democrats maintained that they needed to move on the legislation as quickly as possible to deal with the nation's economic crisis. "We can all talk about how this bill could be better, we can all talk about how we wish we had the time to examine it line by line ... we don't have that luxury," said House Energy and Commerce Chairman Henry Waxman (D-Calif.).

Senior reporter Ben Geman reported from Houston.

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