The Lowdown

OK, with a day to sit back and figure things out, here's what's going on.

The Senate is going to pass their version of the bill by noon on Tuesday at the latest, depending on how much Republicans want to obstruct. There will be a cloture vote on Monday at 5:30ET. Here's a list of what the Axis of Nelson-Collins cut out of the bill to make room for more tax cuts.

$40 billion State Fiscal Stabilization
$16 billion School Construction
$1.25 billion project based rental
$2.25 Neighborhood Stabilization (Eliminate)
$1.2 billion in Retrofiting Project 8 Housing
$7.5 billion of State Incentive Grants
$3.5 billion Higher Ed Construction (Eliminated)
$ 100 million FSA modernization
$50 million CSERES Research
$65 million Watershed Rehab
$30 million SD Salaries
$100 million Distance Learning
$98 million School Nutrition
$50 million aquaculture
$2 billion broadband
$1 billion Head Start/Early Start
$5.8 billion Health Prevention Activity.
$2 billion HIT Grants
$1 billion Energy Loan Guarantees
$4.5 billion GSA
$3.5 billion Federal Bldgs Greening

The $40 billion for state aid is astounding. You're not going to see an economic recovery if the states are having to cut budgets at the same time the feds expand them. They'll cancel each other out.

What you don't see in there are the three big tax cuts that the Senate put in this bill that has crowded out this spending, not for reasons of effectiveness, but purely because squishy moderates couldn't live with a $900 billion dollar bill. They are:

1) $70 billion dollars for a patch so that the Alternative Minimum Tax (AMT) doesn't affect high-middle-income earners making under $1 million dollars a year. This is passed annually because Congress is too cowardly to rewrite the tax code. But it doesn't belong in a stimulus bill, as no less than House Minority Whip JON KYL just said in a floor speech. People making $400,000 a year aren't likely to spend money they get to keep as a result of fixing the AMT.

2) At least $35 billion dollars for a $15,000 home buyer's tax credit, which will only go to people who have enough money to buy a house. This is a craven attempt to reinflate the housing bubble before prices have settled, and because there's so much inventory on the market it will not spur hardly any new home construction.

3) Around $11 billion for a tax credit for car buyers, which will only go to people who have enough money to buy a new car. This is not tied to greening the US fleet and will be implemented before fuel economy standards have changed over, so it doesn't even reward fuel efficiency or reducing greenhouse gas emissions.

These are tax breaks for suburbanites, which in all likelihood won't get spent at anywhere near the rates that they would in the hands of the poor or middle class. And they won't create jobs, either.

Arlen Specter, one of the moderate squishes, said this is the best they can do. The above tax cuts are most certainly not. In particular, the House is piqued about the AMT patch in the bill.

House moderates oppose including the AMT provision in the stimulus package, arguing that the issue should be addressed in the regular budget process so that its cost can be offset by spending cuts or tax increases. But until yesterday, House leaders appeared willing to accept the provision, which was added at the urging of Sen. Charles E. Grassley (Iowa), the senior Republican on the Senate Finance Committee.

With AMT in and some of House Democrats' top spending priorities out, the package could become much more difficult for many House members to swallow, Democratic aides said. House Majority Leader Steny H. Hoyer (D-Md.) said House Democrats will push hard to restore the Senate's deletions. That means, lawmakers said, that the overall cost would grow to around $900 billion to accommodate the AMT fix.

This is the next step. The bill will go to a House-Senate conference. According to Kagro X in a must-read post, the Senate wants the House to swallow this bill whole, claiming that they cannot pass the bill if anything is deleted.

Assuming passage on Tuesday, the House will then have the option to accept the Senate package as is, to make still more amendments and send it back to the Senate, or to agree to the Senate's request for a formal conference to resolve their differences. It is the Senate's announced intention (also included in the unanimous consent agreements from last night) to insist on its version of the bill in conference. If the House acts immediately either to pass the bill or to go to conference, they would have an opportunity to do so Tuesday afternoon. The self-imposed deadline for clearing the bill for the White House falls prior to the scheduled adjournment for the President's Day recess at the end of next week. That doesn't leave a lot of time, and increases the pressure on the House and the likelihood that they'll be forced either to accept the Senate bill, or make only minor changes.

You're going to see a lot of House-Senate wrangling. The Senate could adjourn prematurely and stick the House with the bill. They'll create a sense of urgency through an artificial deadline. And they'll try to ram this flawed bill down the House's throat.

The question is whether or not the Senate moderates would be willing to sink the economy if the House makes changes to the bill in conference that are more than cosmetic. Obviously the rump faction of the Senate isn't going to alter their stance, you can't compromise with crazy. But the Snowe-Collins-Specter-Nelson faction kind of knows that something has to be done. The President is talking up job creation and will be hitting the road this week to increase the pressure. If you want more jobs, you have to eliminate the AMT patch, which can be reconciled through a regular process with offsets, and add back the spending to the states, school construction, and more, which will probably add a million more jobs. Otherwise, you're going to see cops, firefighters, nurses and teachers out on the street (John Kerry is explaining this very well on the Senate floor).

Will the House force the moderates in the Senate to eat a shit sandwich? Will the moderates do it, or will they vote against the bill and sink the economy? There can be no amendments to a conference report, but the bill will need a 3/5 vote. Again, Kagro X:

Just as the bill was subject to a budget point of order in the Senate, so will the conference report be. So the Senate will need 60 votes, filibuster or no, to pass any conference report. That, too, will increase pressure on the House to defer to the Senate position. Senate conferees will no doubt insist that nothing but their Perfect and All-Wise version of the bill could ever muster the necessary 60 votes, and House conferees will have to measure any changes they propose against the likelihood that the Senate's claims are true.

This is a big game of chicken, but if the President and House Democrats can generate enough grassroots support, they may have the cover to swap state spending in and the AMT patch or some of these other suburbanite amendments out.

The other thing, as I've said before, is that the Senate can help themselves by immediately confirming Judd Gregg for Commerce Secretary. Gregg is now recusing himself from all recovery package votes, which is the same as a no vote under the circumstances. Confirming him would reduce the number of Senators to 98, which would mean only 59 votes would be needed for passage. It reduces the moderates needed to eat the shit sandwich by one. If Bonnie Newman then came to the Senate to be seated, she could be blocked unless Al Franken is seated in a compromise action, which would get us 59 Democratic Senators and again keep the number of moderate squishes needed to one. I have no idea why Harry Reid isn't doing this. If he's afraid of Republican bleating he could schedule the Gregg vote immediately before the final vote on recovery and shock doctrine them.

That's basically what's going on. I think the pressure points are Harry Reid and Nancy Pelosi. Tell Reid to allow a real conference instead of forcing the House to make changes, and tell Pelosi that we'll have her back if she strips the AMT patch and adds back aid to the states.