Obama visits Republicans to push relief bill

As the US House of Representatives prepares to vote on President Barack Obama's proposed $825-billion economic stimulus package aimed at wresting the economy out of recession, President Obama privately told Republicans he was willing to consider changes in the legislation.

The bill is expected to pass smoothly enough through the House, where the Democrats have a large majority, but the Senate vote is likely to be more divisive.

In an unusual move that was hailed even by his opponents, Obama ventured to Capitol Hill on Monday to lobby reluctant Republicans in an effort to get a bill to his desk by mid-February with bipartisan backing. Republicans say the plan includes too much spending and not enough tax cuts. Some Senate Democrats also are seeking alterations to the bill.

''The American people expect action; they want us to put together a recovery package that puts people back to work,'' Obama told reporters. ''I don't expect 100 per cent agreement from my Republican colleagues, but I do hope that we can all put politics aside and do the American people's business right now.''

Republicans who attended the closed-door sessions Obama held with House and Senate members said the president did not agree to any specific changes, but did pledge to have his aides consider some points that Republican lawmakers raised dealing with additional tax relief for businesses.

Prodded to budge on another point, Obama said that despite opposition, he would insist on giving relief to wage-earners who pay social security taxes but do not earn enough to pay income tax.

Separately, the Treasury Department announced distribution of $386 million to 23 troubled banks, the first awards from the federal bailout fund since Obama took office a week ago.

House Republican leaders welcomed the president on Capitol Hill a few hours after urging their rank-and-file to oppose the stimulus bill. While the visit earned him Brownie points, it was far from clear that Obama had managed to pick up any support during the day.

''The man's been president for one week, and he's already appearing before the Republican conference, and that's significant,'' said Representative Don Manzullo, an Illinois Republican. ''I'll probably still vote against the bill, because it doesn't reach manufacturing, but that doesn't mean there won't be another opportunity. He's established a dialogue.''

Other Republicans were more blunt. "While the president was genial, his proposal remains rooted in a liberal, big-government ideology that ignores history," said Rep Tom Price of Georgia, head of the conservative Republican study committee in the House.

Republican critics have said that although administration officials talked of tax cuts comprising 40 per cent of the package, a study by the Congressional budget office (CBO) showed tax cuts accounted for one-quarter of the bill. Republicans also complain that the CBO report found that about half of the $604 billion in government spending won't occur until after 2010.

''We don't question the urgency of this package - we question its priorities and its price tag,'' said Representative Jerry Lewis of California, the top Republican on the House appropriations committee. ''Spending should be targeted to key infrastructure investments that will create jobs over the next two years.''

In a sign of the difficulties Obama may face, the Senate finance committee voted yesterday to add to the package a $70 billion alternative minimum tax cut that his administration had wanted to keep separate. Provisions that would have made it easier for state governments to distribute contraceptives to the poor have also been dropped under Republican opposition.

In the Senate, traditionally more bipartisan than the House, a companion bill grew to roughly $900 billion. That included a new tax break for upper middle-income taxpayers, at a one-year cost of $70 billion. It was advanced by Sen Chuck Grassley of Iowa, senior Republican on the finance committee.

CBO figures
Congressional budget office director Doug Elmendorf told lawmakers on Monday that the plan before the House would provide a ''substantial'' boost to the economy. At he same time, he said the package would amount to $816 billion and not $825 billion as calculated by the Democrats.

Appearing before the House budget committee, he said the measures would likely increase the nation's gross domestic product by between 1.2 per cent and 3.5 per cent by the fourth quarter of 2010, and that it would boost employment by between 1.2 million and 3.6 million jobs.

Elmendorf also said the Obama administration is likely to fall short of its goal of pumping 75 per cent of the stimulus into the economy within 18 months. He estimated that about $526 billion, slightly less then two-thirds of the package, would be funneled into the economy by the end of 2010.

Calculations by his non-partisan office also estimated that the plan as crafted by House Democrats, in consultation with Obama and his aides, would only total $816 billion, including $212 billion in tax cuts. Democrats have pegged their plan at $825 billion, of which $275 billion would be tax reductions. Elmendorf said the plan's cost would top $1 trillion because of additional interest payments it would generate over the next 10 years.

Tax cuts, infrastructure boost
The centrepiece of the tax portion of the plan is a $140-billion proposal to provide a $500 payroll tax cut to individuals and $1,000 for families. The stimulus plan would provide money for scores of initiatives, including $40 billion to extend health care coverage to the jobless, $20 billion for school repairs, $30 billion for highway infrastructure projects, $20 billion for food stamps, $18 billion for Pell college tuition grants, and $18.5 billion for energy efficiency and renewable energy programs.

Republicans complained the plan included items unrelated to boosting the economy, including $1 billion for the 2010 census and $400 million to study global warming.

Other measures include more than $120 billion in aid to schools, some of it to protect them from the effects of state budget cuts in a time of recession. The bill also provides more than $80 billion additional funding for Medicaid, the state-federal programme that provides health care for low-income people, and $40 billion more to help people who have recently lost their jobs hold on to employer-provided health care. Another $32 billion is ticketed for transportation projects, and $30 billion more for water projects and rail and mass transit.

The bill also requires that the iron and steel used in construction projects funded by the bill be produced in the US unless the material proved unavailable or prohibitively expensive. The bill would also bar embattled Illinois Governor Rod Blagojevich from having any say in how to spend money his state receives from the plan. The Illinois state legislature would be required to approve the expenditures.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, said his colleagues will seek more changes once the bill comes over from the House. ''We will have a number of suggestions. We're going to continue to try to encourage the majority here in the Congress to incorporate a number of our ideas,'' McConnell told reporters.

Gloomy outlook
Peter Orszag, head of Obama's Office of Budget and Management, dismissed concerns that the bill would stall in the Senate. ''I don't think that's going to happen,'' Orszag said in a Bloomberg Television interview on Monday. ''We're going to get a package that passes the Senate.''

In pressing for speedy approval of the stimulus, Obama has cited announcements by US companies, including Caterpillar Inc and Home Depot Inc, that they are cutting at least 77,000 jobs because of withering sales amid the recession (See: US loses nearly 50,000 jobs in a single day). The nation lost 2.6 million jobs last year, and economists surveyed by Bloomberg News forecast the unemployment rate will rise to a 26-year high of 8.4 per cent by the end of 2009.

The developments coincided with fresh evidence of deterioration in a national economy seemingly growing weaker by the day. Housing prices tumbled by the sharpest annual rate on record in November, and a measure of consumer confidence dropped to a historic low.