Feb. 7 (Bloomberg) -- The U.S. Senate is slated to vote early next week on an economic stimulus package totaling at least $780 billion that President Barack Obama said is needed to prevent the economy from sinking into a deeper recession.

Senate Majority Leader Harry Reid expressed confidence the measure would win approval after Democrats and three Republicans yesterday agreed on a compromise that reduced its cost by more than $100 billion. He said a vote will take place Feb. 10, assuming a key procedural hurdle is overcome the day before.

“We are passing a bold and responsible plan that will help our economy get back on its feet, put people to work and put more money in their pockets,” said Reid, a Democrat from Nevada.

Democratic leaders, who are pushing to deliver a final bill to Obama by the end of next week, were under pressure to forge a deal after a report yesterday morning showed the unemployment rate jumped to 7.6 percent in January, the highest since 1992. Lawmakers must reconcile the Senate bill with an $819 billion stimulus measure the House approved last month.

Obama urged Congress to swiftly complete approval of the bill, citing yesterday’s “devastating” unemployment report.

“Legislation of such magnitude deserves the scrutiny that it’s received over the last month, and it will receive more in the days to come,” Obama said today in his weekly address. “But we can’t afford to make perfect the enemy of the absolutely necessary. The scale and scope of this plan is right. And the time for action is now.”

Stocks Advance

Stocks advanced, ending four weeks of declines, on expectations Congress would reach a compromise on the package. The Standard & Poor’s 500 Index rose 5.2 percent to 868.60 this week, reducing its 2009 decline to 3.8 percent.

Companies including Macy’s Inc., Boeing Co. and PNC Financial Services Group Inc. have announced thousands of job cuts in the last couple of weeks. The world’s largest economy entered a recession in December 2007, according to the National Bureau of Economic Research in Cambridge, Massachusetts. Gross domestic product contracted at a 3.8 percent annual rate in the fourth quarter, the most since 1982.

Throughout this week, a bipartisan group of more than a dozen lawmakers demanded cuts to the bill as its size grew to more than $900 billion. Senator Ben Nelson, a Nebraska Democrat who led the push to reduce that total, said after yesterday’s accord was reached that he and other lawmakers worked “line by line, dollar by dollar” to cut more than $100 billion.

The plan they produced is “about jobs, jobs, jobs,” he said.

Housing, Autos

The $780 billion compromise plan that Nelson and the other lawmakers announced didn’t include the cost of other changes that had been made to the bill earlier this week. Those amendments included tax cuts aimed at boosting the housing and auto industries.

Republicans estimated the bill’s cost would total about $827 billion. And the Senate’s top Republican, Mitch McConnell of Kentucky, said most of his colleagues continue to oppose the bill because, in their view, it emphasizes government spending over tax cuts.

“The president said originally he had hoped to get 80 votes” in the Senate, said McConnell. “It appears that the way this has developed, there will be some bipartisan support but not a lot.”

Obama yesterday said it would be “inexcusable” for Congress to get “bogged down in distraction, delay or politics as usual” over the stimulus legislation “while millions of Americans are being put out of work.”

Pelosi Comments

House Speaker Nancy Pelosi, a California Democrat, said today she remains confident final legislation can be completed within days. She indicated she hasn’t determined whether the $780 billion level is something House Democrats would accept.

“It depends on what the money contains, and how the money is spent,” Pelosi told reporters at a Democratic Party retreat in Williamsburg, Virginia, when asked if that level would be sufficient to boost the economy.

Before the Senate agreement was announced, Pelosi said she was “very much opposed to the cuts that are being proposed in the Senate.” These included reductions in spending for education.

School Construction

The Senate agreement pared $20 billion for school construction, $2 billion to expand broadband access in rural areas, $3.5 billion to make federal buildings more energy efficient and $200 million for NASA. It also reduced a proposed subsidy that would allow the jobless to buy health insurance through their former employers.

The accord dropped tax cuts worth $18 billion and reduced the income cap for workers who would benefit from Obama’s $1,000 payroll tax credit. The cap was reduced to $140,000 from $150,000 for married couples and to $70,000 from $75,000 for singles.

“This compromise greatly improves the bill,” said Senator Susan Collins, a Maine Republican. Republican Senators Olympia Snowe of Maine and Arlen Specter of Pennsylvania announced they also would support the package.

Senators debated the bill for 3 1/2 hours today without taking any votes.

“Thank you, thank you, thank you,” California Democrat Barbara Boxer said to the three Republicans supporting the measure. “You stepped forward to help America.”

Compromise Criticized

Arizona Republican Jon Kyl criticized the compromise, saying “you can’t fix it by shaving a little of the spending off.” He asked, “is this a way to legislate” a spending plan “that’s going to be a burden to our children and grandchildren?”

Democrats, who control the Senate with 58 votes, need support from at least two Republicans to gain the 60 votes needed in Monday’s procedural vote to bring the bill up for approval.

Lawmakers yesterday approved an amendment to fix the troubled HOPE for Homeowners program. That initiative was created last year to let homeowners struggling with subprime loans refinance into fixed-rate loans backed by the government.

The program, designed to help 400,000 borrowers, has refinanced just two dozen mortgages since October because, lawmakers said, the terms to enroll were too tough. The amendment would cut fees for borrowers and provide additional incentives for lenders. It would also require the Treasury Department to devote at least $50 billion of the $700 billion Troubled Asset Relief Program to stem housing foreclosures.

Repay Bonuses

Another adopted amendment would require financial institutions that take money from the TARP program to repay the cash portion of bonuses topping $100,000 that were paid to employees for work last year.

“This amendment makes it clear that it’s not enough to say that the excessive bonuses are wrong -- it requires that companies pay those bonuses back to our taxpayers,” said Senator Ron Wyden, an Oregon Democrat.

Lawmakers also approved an amendment imposing tougher restrictions than the House imposed on how money in the stimulus bill could be spent. The House measure bars stimulus funding from going to casinos, aquariums, zoos, golf courses and swimming pools. The Senate amendment also would bar the money from going to museums, arts centers, theaters, highway beautification projects, stadiums and parks.

To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net; Christopher Stern in Washington at joconnell3@bloomberg.net

Last Updated: February 7, 2009 16:33 EST