The U.S. Senate voted Tuesday 61-37 in favour of President Barack Obama's $838 billion economic rescue plan, with weak Republican support, setting the stage for tough negotiations over the final version of the bill.
REUTERS - The U.S. Senate approved an $838 billion economic rescue plan on Tuesday, setting the stage for tough haggling this week over the final package of tax cuts and spending aimed at averting a deeper recession.
President Barack Obama wants the Democratic-controlled Congress to deliver a package to his desk this weekend, but the Senate and House of Representatives must first reconcile differences between their two bills. The House has approved an $819 billion plan.
The Senate voted 61-37 to approve its version. Later on Tuesday leaders of both chambers were expected to name negotiators to meld the bills together in what are expected to be marathon talks. Both chambers must approve the final plan.
While Obama has sought bipartisan support, he so far has only won the backing of three Senate Republicans who have made it clear that they will withdraw their support if a large amount of spending is added.
In the Senate, at least 60 votes are needed to clear potential procedural hurdles and Democrats only control 58 seats.
“If it’s more expensive, if it has wasteful spending added back in, then it would be very difficult for us to support,” Sen. Susan Collins, a Maine Republican who led the effort to forge a compromise with the Democrats, said on Monday.
To win the support from three Republicans, the Senate sliced tens of billions of dollars out of its version, including $16 billion for school construction and $40 billion in direct aid to states that are facing growing budget gaps.
However, Obama has already said he wants some of the education money restored. House Majority Leader Steny Hoyer, a Maryland Democrat, warned that negotiations could stretch beyond Obama’s deadline and into the middle of next week.
In a sign of how tough negotiations could be, Sen. Charles Schumer, a New York Democrat, noted recent massive job losses and said, “In my judgment this package should be more heavily tilted towards spending” to create more jobs.
JUST PART OF THE PLAN
The two chambers different mixes of tax credits, tax incentives to rejuvenate the shattered housing market, as well as tens of billions of dollars for infrastructure projects, health care and education.
On its own, the stimulus package was unlikely to repair the struggling economy because it does not address financial sector problems. As long as banks face mounting losses and struggle to raise money from the private sector, lending will be limited and so will economic growth.
The Obama administration is trying to address this problem on a separate track through a bank rescue program unveiled by Treasury Secretary Timothy Geithner earlier on Tuesday.
Republicans have demanded the stimulus bill should focus more on tax cuts rather than on spending they say will not boost the economy. But Obama has rejected that, arguing such policies under President George W. Bush contributed to the current crisis.
“It’s full of waste, we have no assurance it will create jobs or revive the economy,” said Senate Minority Leader Mitch McConnell. “We’re taking an enormous risk, an enormous risk with other people’s money.”
To try to build public support for the spending and tax cut package, the new president has hit the road heading to Florida on Tuesday and Illinois later in the week.
There are big political risks for both parties in the struggle over the stimulus, which at about $838 billion would be almost 6 percent of gross domestic product and about a quarter of the size of the U.S. federal budget.
Congressional elections are less than two years away and without some improvement in the economy, Democrats in control of the White House and Congress could be punished by voters in 2010.
Date created : 2009-02-10