Senate Republicans and even some Democrats are pressing for big changes to the $819 billion economic stimulus package the House passed this week, setting the stage for a bruising debate over tax cuts and spending that will test the Obama White House.
The demand for major changes comes amid mounting criticism from some economists that the bill does not focus tightly enough on government programs that will quickly create jobs or tax breaks that will spark spending by consumers and businesses.
Some caution that the proposals President Obama has called for try to achieve too many objectives – for example, broader health care coverage and energy efficiency – at the expense of focusing tax dollars on the core issue of job creation. They say more should be spent on things such as infrastructure repair – either directly or by channeling money to the states for projects now delayed for lack of adequate tax revenue.
Others say the best bang for the buck would come from a stimulus package devoted mainly to tax cuts rather than public investment. The breakdown in the $819 billion bill that the House approved Wednesday and the Senate will take up next week is two-thirds spending, one-third tax cuts.
Obama took a different approach in a press conference Friday. Seizing on dismal fourth-quarter gross domestic product figures and the prospect of an even weaker first quarter, he called the contraction “a continuing disaster” for working families and pushed Congress to act quickly to provide relief.
Not a single Republican voted for the version of the bill that the Democratic-controlled House approved. But some Senate Republicans say they want to find a way to support the bill.
Republicans and some prominent Democrats said they would push to add or expand initiatives to prop up the collapsed housing market, which was a major cause of the recession. Democratic leaders said they were open to the ideas, including a $15,000 tax credit for homebuyers.
GOP senators said they would put forward numerous amendments, especially broader and deeper tax cuts, and efforts to strip out some major spending provisions that support long-term policy goals of Obama and congressional Democrats but may not provide a quick jolt to the economy.
The Republicans also said they intended to remove several provisions that they say smack of special-interest pet projects, including disaster insurance for honey producers.
At a strategy session Thursday with Obama's top economic adviser, Lawrence Summers, Democrats and the White House agreed to allow full debate on the stimulus in the Senate rather than try to jam the bill through with a small margin of victory. At a minimum, Democrats need at least two Senate Republicans if they are to muster the 60 votes needed to pre-empt any filibuster.
Already, the Senate version of the bill is substantially different from the House package, including a provision to protect millions of middle-class Americans from having to pay the alternative minimum tax in 2009, which brings the total cost of the Senate bill to nearly $890 billion. Reconciling the two versions will require further negotiations with House leaders after the Senate acts. Floor debate is expected to last through next week.
It is not clear how much the White House is willing to compromise, and a push from Obama's Democratic former colleagues in the Senate for strong efforts to help the housing market could generate some of the most intense negotiations.
Sen. Kent Conrad, D-N.D., chairman of the Budget Committee, has said that the stimulus does not address foreclosure problems at the root of the recession.
Obama's aides have promised to devote $50 billion to $100 billion from the Treasury's bailout program to mitigate foreclosures, but have yet to announce the specific programs they intend to pursue.
Conrad and other Democrats are also pushing for more spending on public works projects that can be undertaken swiftly for rapid job creation.
“The majority opinion is the people want jobs, jobs, jobs,” Sen. Ben Nelson, D-Neb., said Friday in a TV interview. “To do that, you have to go to those programs far more like infrastructure, construction, roads, bridges, other kinds of infrastructure, even let's say, money to help rebuild and build schools.”
Nelson said that he was in talks with Republican colleagues including Sen. Susan Collins of Maine and his fellow Nebraskan, Sen. Mike Johanns, about changes to the bill.
In a conference call with reporters on Friday, Sen. Charles Schumer, D-N.Y., said Democrats were working on an amendment that would increase the focus on infrastructure projects.
Sen. Robert Bennett, R-Utah, said Democrats should break out pieces of the huge stimulus that both parties agree will work quickly and approve them.
“You could take the $30 billion for roads and bridges that is truly shovel-ready and pass that this afternoon,” Bennett said. “Let's pick those pieces out, pass them right away and then say, ‘OK, this is a down payment on the $800 billion.'”
Some Republicans are also pushing to allow all creditworthy homeowners to refinance their mortgages at rates of 4.5 percent or lower.
Provisions in the plan that have drawn criticism in both parties include $400 million for research and prevention of sexually transmitted diseases, and tens of millions for renovations to government buildings.