By Richard Cowan and Susan Cornwell
WASHINGTON (Reuters) - U.S. congressional negotiators said on Wednesday they had reached a deal on a $789 billion (548 billion pound) package of spending and tax cuts, handing a big victory to President Barack Obama in his effort to pull the economy out of a tailspin.
But in a possible last-minute snag, negotiators delayed a meeting to vote on the compromise so lawmakers in the Senate and House of Representatives could be briefed.
The compromise followed earlier approval of separate House and Senate bills whose differences needed reconciling.
One congressional aide said there was no deal yet on money for school construction and states, key areas of difference. The Senate had cut out $16 billion for schools and $40 billion for states but Obama had sought the restoration of funds for schools.
The massive package is aimed at reversing a deep recession that began 14 months ago, and news of the deal sent stock markets higher.
Votes in both chambers on the compromise will likely be set for later this week.
Democrats control both chambers in Congress and fellow Democrat Obama has pushed them for a quick conclusion to the legislation in hopes it will begin to create and save up to 4 million jobs in an economy that has seen millions of workers laid off.
But his stimulus plan has met virtually no support among Republicans opposed to big government spending, underlining the scale of his task after he won election in November pledging to reach across party lines from the White House. In the Senate, passage of the bill depended on support from a handful of moderate Republicans.
Negotiators in the House and Senate agreed to scale back earlier proposals for the package.
"Every economic indicator and every passing day reminds us of how we must act, and act robustly and quickly," said Senate Majority Leader Harry Reid, announcing the deal.
"Like any negotiation, this involved give and take."
Negotiators had worked around the clock to meld an $820 billion House bill with an $838 billion Senate measure, trying to meet a deadline set by Obama to produce a plan that he wants to sign into law by Monday.
Without a stimulus bill, Obama has said the country faces a possible economic "catastrophe."
WOOING REPUBLICAN SUPPORT
Democrats control 58 seats in the 100-seat Senate and need some Republican support to reach 60 votes and overcome any possible procedural hurdles.
The scant Republican backing for the plan so far marked a failure of Obama's pledge to build bipartisan support.
Three moderate Republican senators, Susan Collins, Olympia Snowe and Arlen Specter, had demanded that the negotiators pare the bill to below $800 billion in exchange for their votes.
"And the fact is that we hung tough and it was modified only in the case of absolute necessity to go to 789 (billion dollars)," Specter said.
Collins said they had agreed on a $54 billion fund for states to help them plug growing budget deficits as well as pay for some school construction.
But a House Democratic leadership aide said they wanted to make sure governors were forced to use about $10 billion to build schools.
Collins also said they trimmed a tax incentive to encourage the purchase of cars and homes.
At the suggestion of the White House, they also agreed to a somewhat smaller tax credit for workers that would now total $400 for individuals and $800 for couples. An earlier version of the bill would have granted $500 and $1,000 respectively.
Additionally, there was pressure to add more money to infrastructure projects and Collins said there was roughly $150 billion in the compromise package, ranging from transportation to efforts to expand high-speed Internet service.
SPENDING 'WISELY'
Seeking to blunt Republican criticisms that the bill contains wasteful spending that won't necessarily stimulate the economy, Obama said on a visit to a Virginia construction site: "We're going to do more than has ever been done before to make certain that every tax dollar is spent wisely and on its intended purposes."
A one-year fix of the Alternative Minimum Tax, costing about $70 billion, was also included. That fix would prevent middle-class taxpayers from being sucked into higher taxes paid by the wealthiest, which Congress never intended.
Republicans have been nearly unanimous in their opposition to the stimulus legislation, arguing it was poorly crafted and could end up wasting taxpayer money. Some House Republicans on Capitol Hill complained that they had been left out of the final negotiations.
Alone, the stimulus package is unlikely to fix the U.S. economy because it does not address financial sector problems that dried up credit.
The Obama administration hopes that will be addressed through a bank rescue program unveiled by Treasury Secretary Timothy Geithner on Tuesday. Initial reaction to that was cool from Wall Street, where stocks plunged as traders expressed disappointment there were not more details.
(additional reporting by Donna Smith and Jeremy Pelofsky; editing by Frances Kerry)
