UPDATE: Senate Democrats Mull $780 Billion Eco Stimulus Compromise

UPDATE: Senate Democrats Mull $780 Billion Eco Stimulus Compromise

By Corey Boles and Martin Vaughan

Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- Senate Democrats are meeting to consider a compromise $780 billion deal on the economic stimulus plan, according to a senior Democratic Senate aide.

The compromise includes a combination of cuts to spending measures and reductions to tax credits that had been included in the original stimulus package.

The outcome of the Democratic meeting is unclear, and there is a possibility that elements of the Democratic caucus may reject the compromise agreement. Were this to occur, there could be more meetings throughout Friday evening to attempt to broker a subsequent agreement.

Another senior Democratic aide said that Sen. Edward Kennedy, D-Mass., is on his way back to Washington to cast a vote on the stimulus package.

Kennedy, who has been ill fighting brain cancer, has not cast a vote since November. Even though he would only represent the 58th Democratic vote - assuming they were able to hold the entire caucus together - Kennedy's presence would place significant pressure on the Republicans to let a final vote proceed Friday evening.

The framework of the agreement was reached after meetings all day long between Majority Leader Harry Reid, D-Nev., and moderate Democrats and Republicans.

Senate Finance Committee Chairman Max Baucus, D-Mont., said upon entering the Democrats' meeting Friday evening that he supports cutting a "modest amount" from the tax cut portion of the bill. One Senate aide said the proposal from the bipartisan moderate coalition is to cut between $20 billion and $25 billion in tax provisions.

According to this aide, some of that would come from trimming a tax cut that would help clean-energy firms and money-losing firms by allowing them to get refunds for taxes paid in past years.

The original provision would have allowed for general business credits, including solar investment tax credits, wind energy production tax credits, and research and development credits, to be carried back five years. One source close to the discussions said the carryback period could be trimmed to four years.

Other possibilities for savings are cutting from new bond provisions in the bill that benefit state and local governments, or narrowing a benefit to low- income families that under current law do not make enough to benefit from the child tax credit, the source said.

Sens. Ben Nelson, D-Neb.; Susan Collins, R-Maine; and Arlen Specter, R-Pa., have been locked in a series of meetings Friday with Reid to try to reach an agreement on reducing the size of the package.

At the beginning of the week, the Senate version of the stimulus plan had a price tag of $885 billion, but by Friday it had risen to around $935 billion.

-By Corey Boles and Martin Vaughan, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com

(Gregg Hitt contributed to this article.)

Corrected February 6, 200907:56 ET (12:56 GMT)

A senior Democratic aide said that Sen. Edward Kennedy, D-Mass., is on his way back to Washington to cast a vote on the stimulus package. Kennedy represents the 58th Democratic vote.

("Senate Democrats Mull $780B Compromise Economy Stimulus Plan" published at 5:57 p.m. EST Friday and updated at 6:11 p.m. incorrectly reported that Kennedy represents the 59th Democratic vote.)

(END) Dow Jones Newswires
02-06-091826ET
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