House and Senate leaders Wednesday struck a deal on a $789 billion economic stimulus bill after little more than 24 hours of rapid-fire negotiations with the Obama administration, clearing the way for final congressional action later this week. The package of spending increases and tax relief, intended to spur an economic recovery and create jobs by putting money back in the pockets of consumers and companies, ended up smaller than either the House or Senate had proposed. Many Democrats would have preferred a larger bill, but agreed to pare back, including cuts to some favored education and health programs, to win three crucial Republican votes in the Senate. “Legislation is the art of compromise, consensus building, and that’s what we did,” Senate Majority Leader Harry Reid, D-Nev., said in announcing the accord. The House was poised for a final vote as early as Friday, with the Senate to follow shortly afterward, clearing the way for President Barack Obama to sign the bill by Monday. In a statement, the president thanked Congress for agreeing to a measure that he said would save or create 3.6 million jobs. “I’m grateful,” Obama said, “for members in the House and Senate for moving it along with the urgency that this moment demands.” The deal reflected a calculated gamble by Obama in the first weeks of his term. To win crucial Republican votes, the final stimulus package is considerably leaner than what many economists say is now needed to jolt the economy, given its grave condition. But it is unclear if Obama will be able to claim credit for bringing change to Washington by winning bipartisan support for his first major piece of legislation.

Not a single House Republican voted for the bill when it came to the floor two weeks ago, and despite many compromises in the Senate, only three Republicans came on board. The final bill includes $507 billion in spending programs and $282 billion in tax relief, including a scaled-back version of Obama’s middle-class tax-cut proposal, which would give credits of up to $400 for individuals and $800 for families within certain income limits. House Democrats, angry over some of the cuts, particularly for school construction, initially balked at the deal and delayed a final meeting Wednesday afternoon between House and Senate negotiators.

House Speaker Nancy Pelosi, D-San Francisco, was conspicuously absent from Wednesday’s news conference in which members of the Senate announced the agreement. Officials had said previously that one of the final issues to be settled was money for school modernization, a priority for Pelosi as well as Obama and one on which they differed with the moderate Republicans whose votes will be essential for final Senate approval. Originally, Pelosi and House Democrats wanted a new program dedicated to school construction, but Republicans held firm against that. In the end, officials said the agreement added flexibility to a $54 billion state stabilization fund, to permit local governments to use some of the money for modernizing school buildings but not building new ones.

While final details and dollar amounts were not available late Wednesday, the general outlines of the agreement show it will help California with its $40 billion budget shortfall. Reimbursement for Medicaid spending and a special fund for the states would mean about $14 billion for California, according to one congressional staffer. The plan also will mean about $4.5 billion for highway and transit projects in California, Caltrans Director Will Kempton said after a meeting of state transportation officials at the White House. “That will be a big help, and we are confident we will be able to get this money out fairly quickly,” said Kempton, who recently postponed $2.2 billion in projects because of state budget woes. California taxpayers also will benefit from a $70 billion provision that will protect about 4 million residents from the alternative-minimum tax.

But some House Democrats complained that the provision shouldn’t be part of a stimulus plan because it pushed out more infrastructure spending. Even trimmed to $789 billion, the recovery measure will be the most expansive unleashing of the government’s fiscal firepower in the face of a recession since World War II. Yet it seemed almost trifling compared with the $2.5 trillion rescue plan for the financial system — a combination of loans to banks and incentives to bring private capital into the banking system — announced Tuesday by Treasury Secretary Timothy Geithner. Although the final legislative language was not immediately available, lawmakers said the bill contained more than $150 billion in public works projects for transportation, energy and technology, and $87 billion in aid to help states meet rising Medicaid costs.

Despite intense lobbying by governors around the country, the final deal slashed $25 billion from the proposed state fiscal stabilization fund, eliminated $16 billion in aid for school construction and sharply curtailed health care subsidies for the unemployed. The Senate bill came together only after a bipartisan group of centrist senators, led by Susan Collins, R-Maine, and Ben Nelson, D-Neb., reached a deal to trim the cost of the package to $838 billion from more than $920 billion. “These aren’t easy times, obviously for America,” Sen. Olympia Snowe, R-Maine, who also was a member of that group, said at the news conference with Reid to announce the final agreement. “Given the gravity of the circumstances economically, I thought it was important to be part of a process that could yield a consensus-based solution.”

But the majority of Republicans continued to criticize the stimulus measure Wednesday as a bloated and ill-designed spending bonanza by Democrats on favored projects that would not help lift the economy out of recession but would permanently expand the federal government and plunge future generations of Americans deep into debt. “Yesterday, the Senate cast one of the most expensive votes in history,” the minority leader, Sen. Mitch McConnell, R-Ky., said. “Americans are wondering how we’re going to pay for all this.

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