Senate Majority Leader Harry Reid, D-Nev., said that negotiators from the House and Senate have reached an agreement on the stimulus package.

The Senate approved an $838 billion bill on Tuesday, and the House passed an $819 billion bill last week, with variations in tax cuts and spending (see Senate Approves Stimulus Package). Negotiators pared down the size of the package to about $789 billion on Wednesday.

“The differences between the House and Senate versions were resolved,” said Reid (pictured). “The middle ground we’ve reached creates more jobs than the original Senate bill and spends less than the House bill,” he added. "Like any deal, this involved give and take, and if you don’t mind my saying so, that’s an understatement, but the agreement we've reached stays faithful to the principles.”

Some of the changes are still being worked out, but may include a possible reduction in President Obama’s signature program, the Making Work Pay refundable tax credit. Instead of providing $500 a year for individuals and $1,000 per year for couples in 2009 and 2010, it will offer $400 for individuals and $800 for couples. The compromise package retains a one-year patch on the Alternative Minimum Tax costing $69.8 billion that was added to the Senate bill by Senate Finance Committee ranking member Charles Grassley, R-Iowa. However, it all but eliminates a $15,000 tax credit for homebuyers that had been added to the Senate bill. The deal retains a tax break for new car purchases that allows taxpayers to deduct the sales tax, but not the interest on car loans.

It also includes a tentative agreement on providing a one-time payment to recipients of Social Security, Supplemental Security Income, veterans’ pensions and disability.

The final deal includes $150 billion in infrastructure spending, but slashes about $25.4 billion from the $79 billion in aid to state governments that was included in the House version of the bill, leaving about $53.6 billion in state aid. The deal also cuts billions of dollars in school construction funds allocated in the House bill, although a compromise is in the works. The compromise also reduces health care subsidies for the unemployed provided in the House bill. However, it retains $6.5 billion in funding for the National Institutes of Health added by Sen. Arlen Specter, R-Pa.

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