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US senate backs stimulus plan
US senate approves spending and tax cut plan to boost beleaguered economy.
Last Modified: 14 Feb 2009 07:54 GMT

Both the house and senate spent days in
negotiations over the deal [GALLO/GETTY]

The US senate has approved a $787bn economic stimulus bill aimed at boosting the country's ailing economy, in what is seen as a major victory for Barack Obama, the US president.

The senate voted 60-38 for the compromise bill hours after the House of Representatives also passed it.

But Democrats who control congress failed to win over many Senate Republicans, dashing Obama's hopes the economic package would win broad bipartisan support.

The stimulus package, reduced from its original size of around $937bn, aims to cut taxes for the US middle class, boost construction projects and create up to four million new jobs.

Most Republicans, and some moderate Democrats, had opposed the stimulus plan, arguing it expanded government spending too much and did not include enough tax cuts needed to boost the economy.

Members of the house and senate from both the Republican and Democrat parties had forged an agreement on the deal on Wednesday following long-drawn-out talks.

Obama had urged the Democratic-controlled congress to pass the stimulus bill before the end of the coming holiday weekend so he can sign it into law.

Partisan view

The stimulus package contains about $287bn in tax breaks, with the remaining $500bn to used in spending plans.

About $120bn will be go towards roads and transport projects, as well as improving broadband technologies.

In depth
Another $30bn is devoted to healthcare and medical research projects, while $6bn will go towards guaranteed loans aimed at boosting renewable energy projects.

While the passage of the bill by the senate is a boost to Obama, ideological differences over the plan have highlighted the divide between Democrats and Republicans.

"It is a victory in the sense that it is happening with unprecedented speed, especially when one considers the amount of money involved, but it is not a victory for bipartisanship," Nick Spicer, Al Jazeera's correspondent in Washington DC, said.

"President Obama wanted to govern in a bipartisan way, and that certainly has not been happening."

The package is unlikely to be the last in a series of multibillion dollar plans to rescue the US economy, Spicer said.

"The bill was described as something that had to be passed ... but next week we are looking at coming up with another $700bn to overhaul the financial system. This is basically economic recovery on an instalment plan," he said.

'Essential plan'

Obama on Thursday described the stimulus package as essential to turn around the US economy, which has been buffeted by the subprime mortgage crisis, tight credit, failing banks and the global economic slowdown.

The stimulus plan

 Plan is worth $787bn
$287bn set aside for tax breaks
 $500bn allocated for spending, of which:
 $120bn will go towards roads, transport and broadband infrastructure
 $60bn for healthcare and medical research
 $6bn for renewable energy loans

Right now, we have a once in a generation chance to act boldly, to turn adversity into opportunity, and use this crisis as a chance to transform our economy for the 21st century," he said.

"That is the driving purpose of the recovery and reinvestment plan."

However, Lawrence Summers, director of the White House National Economic Council, told NBC on Friday that the stimulus package is not some "miracle cure" or "silver bullet" for the economy.

"I think this is a key part of what's going to be a multipart strategy to contain this decline," he said.

"[The problems] weren't made in a week, a month, a year. It's going to take time to fix."

Source:
Al Jazeera and agencies
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