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By Richard Cowan
WASHINGTON, Feb 9 (Reuters) - A compromise deal to revive the U.S. economy will most likely emerge from negotiations between President Barack Obama and House Speaker Nancy Pelosi.
Barely three weeks in the job and less than five years in national politics, Obama must get Pelosi behind a bill that merges House of Representatives and Senate versions and will clear both houses of Congress, possibly late this week.
The last act in this long-running debate over how to stimulate the ailing economy will kick into gear now that the Senate has set up a vote on Tuesday to pass its version of the legislation.
Here are some thoughts on how it might play out:
* In a move that will likely please Pelosi, Obama complained on Monday about how much money for education the Senate had cut and said some of it should be restored. Last week Pelosi assailed the Senate for removing $16 billion intended to rebuild schools. As the House and Senate move into final negotiations, Pelosi may not get the full $16 billion but Obama has opened the door to some. "We need the White House to step in and referee," said an aide to the House Democratic leadership.
* Pelosi has a record of staking out hardline positions that end up being difficult to sell. Some examples include her failed drive over the past two years to bring the Iraq war to an end and her inability to stop expanded offshore oil drilling that put her at odds with Obama during his campaign last year. Similarly, Pelosi might end up having to give up some of the emergency spending she badly wants, including some aid to states. But as Speaker of the House, she is well-positioned to insert that money into other bills Congress will debate later this year.
* Jettison AMT? The Senate bill includes a temporary fix of the Alternative Minimum Tax so that middle-class taxpayers do not get sucked into paying a tax originally aimed at the rich. Taking this tax change out of the economic stimulus bill would knock $70 billion off the cost and would score points for Pelosi among moderate House Democrats. They want the tax fix, but unlike the Senate, they also want to pay for it so it doesn't add more government debt.
* Obama, Pelosi and Senate Majority Leader Harry Reid all agree time is of the essence. More important than the details of the bill, the three Democrats want it enacted by mid-February to help stop huge job losses. If House-Senate talks get sticky, they will pull out their whips. As one House Republican aide acknowledged, "Right now I don't see any major bomb that would blow this thing up." Some Republican aides were even speculating that as many as 20 House Republicans could end up voting for a compromise bill, after none voted for the first version. (Editing by Chris Wilson)