Obama, Congress wrangle over stimulus plan details
NOTE: A breakdown of Pres. Obama's stimulus plan appears at the end of this story.
WASHINGTON (AP) - President Barack Obama said Monday that "very modest differences" over a massive package to revive the economy should not delay its swift passage, a fresh appeal to Congress as the nation dealt with another dose of dire financial news.
Obama teamed up with Vermont Gov. Jim Douglas, the Republican vice chairman of the National Governors Association, as he sought bipartisan backing for the stimulus legislation. An $819 billion version passed the House last week, without a single Republican vote. The Senate took up their $900 billion version on Monday.
GOP lawmakers argue that the plan is too expensive and doesn't include enough tax cuts. "If I were writing it, it might look at little different," said Douglas, who sat at Obama's side in the Oval Office. "But the essence of a recovery package is essential to get the nation's economy moving."
Douglas is among several GOP governors who are breaking with their Republican colleagues in Congress to ask for approval of the plan. Douglas is in Washington to lobby the Senate. Obama said that those who really know what is needed around the country - governors - have been asking for help from Washington since he was elected in November.
"With very few exceptions, I heard from Republicans and Democrats the need for action, and swift action," Obama said.
Obama and Vice President Joe Biden were scheduled to meet at the White House Monday afternoon with Democratic congressional leaders about the stimulus package.
Obama's appeal came as the Commerce Department reported that personal spending fell for the sixth straight month in December by 1 percent. Analysts had predicted a decline of 0.9 percent. Incomes also dipped, and the personal savings rate shot higher, a sign that consumers remain extremely nervous about the economy.
The department also said construction spending dropped by 1.4 percent in December, slightly worse than the 1.2 percent decline economists expected. Earlier Monday, Obama promised to establish a review board to oversee the government's separate $700 billion financial industry bailout program. Aides said later that he meant to refer to a oversight board for the stimulus package, as is called for in the legislation.
He also signaled it is likely that his administration will ask for more money for that program beyond the $700 billion. "We can expect that we're going to have to do more to shore up the financial system," Obama said.
An announcement is expected next week on how the Obama administration plans to use the last $350 billion of that effort, which has come under heavy congressional and public criticism.
The president said he was taking full responsibility for rescuing the U.S. economy, in its worst downturn in 80 years. Already looking ahead to the 2012 presidential election, Obama said: "If I don't have this done in three years then there's gonna be a one-term proposition." He spoke during an interview taped Sunday and aired Monday on NBC's "Today" show.
The massive infusion of taxpayer money into the financial sector has largely failed to thaw the nation's credit markets, while some financial institutions used the money to pay dividends, buy other banks and pay out big year-end bonuses to employees. Obama said some of the nation's banks would have to write down bad debts, while other banks may fail.
"It is likely that the banks have not fully acknowledged all the losses that they're going to experience. They're going to have to write down those losses. And some banks won't make it," he said. While keeping up a drumbeat of dire predictions in the short term, Obama assured Americans that their bank accounts were not in danger.
"All deposits are gonna be safe for ordinary people. But we're gonna have to wring out some of these bad assets," he said. The president demurred when asked if he planned to set up a so-called "bad bank" under which the federal government would take on the bad debts and investments of financial institutions. He suggested, however, that something like that was in the works, and that taxpayers would become owners of stock in those banks and investment houses. "We're going to have to ring out some of these bad assets," he said. Highlights of the $888 billion economic recovery plan drafted by Senate Democrats and President Barack Obama's economic team. Many provisions expire in two years.
SPENDING: -Aid to the poor and unemployed - $47 billion to provide extended unemployment benefits through Dec. 31, increase them by $25 a week and provide job training; $16.5 billion to increase food stamp benefits by 13 percent; $3 billion in temporary welfare payments. -Direct cash payments - $17 billion to give one-time $300 payments to Social Security recipients, poor people on Supplemental Security Income, and veterans receiving disability and pensions. -Health care - $26 billion to subsidize health care insurance for the unemployed under the COBRA program; $87 billion to help states with Medicaid; $24 billion to modernize health information technology systems; $5.8 billion for preventative care; $3.5 billion for health research and construction of National Institutes of Health facilities; $870 million to combat flu. -Infrastructure - $46 billion for transportation projects, including $27 billion for highway and bridge construction and repair and $11.5 billion for mass transit and rail projects; $4.6 billion for the Army Corps of Engineers; $5 billion for public housing improvements; $6 billion for clean and drinking water projects. -Education - $54 billion in state fiscal relief to prevent cuts in state aid to education; $26 billion to fund special education and the No Child Left Behind K-12 law; $19.5 billion for school modernization; $14 billion to boost the maximum Pell Grant by $500 to $5,350; $2.1 billion for Head Start. -Energy - $14.4 billion for Energy Department energy efficiency and renewable energy programs; $4.6 billion for fossil fuel research and development; $6.4 billion to clean up nuclear weapons production sites; $4.5 billion toward a so-called "smart electricity grid" to reduce waste; $2.9 billion to weatherize modest-income homes. -Law enforcement - $4 billion in grants to state and local law enforcement to hire officers and purchase equipment. TAXES: -$500 per-worker, $1,000 per-couple tax cut for two years, costing about $142 billion. For the last half of 2009, workers could expect to see about $20 a week less withheld from their paychecks starting in June. Millions of Americans who don't make enough money to pay federal income taxes could file returns next year and receive checks. - Spare about 24 million taxpayers from being hit with the Alternative Minimum Tax in 2009, at a cost of about $70 billion. The change would save a family of four an average of $2,300. The tax was designed to make sure wealthy taxpayers can't use credits and deductions to avoid paying any taxes. But it was never indexed to inflation, so families making as little as $45,000 could get significant increases without the change. Congress addresses it each year, usually in the fall. - Increase the earned-income tax credit - which provides money to the working poor - for families with at least three children, at a cost of $4.7 billion. - Greater access to the $1,000 per-child tax credit for the working poor in 2009 and 2010, at a cost of $10.5 billion. Workers making as little as $6,000 a year who pay no income taxes would be eligible for checks. - Provide a $2,500 tax credit for college tuition and related expenses for 2009 and 2010, at a cost of $13 billion. The credit is phased out for couples making more than $180,000. Low-income families that pay no income taxes can qualify for a portion of the credit. - Repeal a requirement that a $7,500 first-time homebuyer tax credit be paid back over time for homes purchased from Jan. 1 to Sept. 1, unless the home is sold within three years, at a cost of $3.7 billion. The credit is phased out for couples making more than $150,000. - Exclude from taxation the first $2,400 a person receives in unemployment compensation benefits in 2009, at a cost of $4.7 billion. - Extend and increase tax credits to homeowners who make their homes more energy efficient, at a cost of $4.3 billion. Homeowners could receive tax credits of up to $1,500 for upgrading furnaces and hot water heaters and making other improvements through 2010. BUSINESSES: - Provide an infusion of cash into money-losing companies by allowing them to claim tax credits on past profits dating back five years instead of two, at a cost of $19.5 billion. - Allow money-losing businesses to apply a long list of business tax credits to taxes paid in the previous five years, providing them with refunds, at a cost of about $11 billion. - Extend a provision allowing businesses buying equipment such as computers to speed up the depreciation of that equipment through 2009, at a cost of $5.3 billion. - Repeal a Treasury provision that allowed firms that buy money-losing banks to use more of the losses as tax credits to offset the profits of the merged banks for tax purposes. The change would increase taxes on the merged banks by $7 billion over 10 years. - Extend tax credits for renewable energy production, at a cost of $13 billion. (Copyright 2009 by The Associated Press. All Rights Reserved.)