Stimulus Plan Faces Tough Road Through Congress

Top White House economic adviser Lawrence Summers said Monday that a proposed $800 billion economic recovery plan was essential to ending the country's year-long recession.

"This package, combined with a robust financial recovery package ... will offer the best possible prospect to arresting the decline," the National Economic Council director told Fox News television in an interview.

"There are enormous uncertainties ...(it) will take a long time to fix," said Summers. President Barack Obama is pressing for the plan to be agreed by U.S. lawmakers this week.

Meanwhile, a showdown is brewing in Congress over a massive economic stimulus plan, with the House and Senate at odds over some key features of the package.

The $827 billion Senate version of the plan was expected to pass a procedural vote around 5:30 pm EST Monday and the full Senate on Tuesday.

However, it must be reconciled with the House version, which totaled $820 billion in spending and tax cuts, which could mean more inaction and partisan recriminations in the days ahead.

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President Barack Obama, who has not explicitly backed either proposal but wants a stimulus plan passed quickly.

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The House and Senate bills overlap in many ways, but the Senate bill has a greater emphasis on tax cuts, while the House bill devotes more money to states, local governments and schools. The differences are likely to mean difficult negotiations when House and Senate conferees meet later in the week to try to reconcile the two measures.

The Senate stripped $108 billion in spending, including $40 billion in aid to state governments for education and other programs. The bill retained items that also probably won't do much for the economy, such as spending $1 billion to fix problems with the 2010 Census.

Breakdown of Key Points

Here's a look at the key points of contention between the two versions:

Spending:

—State aid: The Senate bill has $39 billion in education aid to states. The House measure has $79 billion, including a $25 billion block grant for other programs.

—Direct aid to individuals: The Senate devotes $17 billion for one-time $300 payments to Social Security recipients, poor people on Supplemental Security Income and veterans receiving disability and pensions. The House has $4 billion to provide a one-time additional Supplemental Security Income payment to poor elderly and disabled people of $450 for individuals and $630 for married couples.

—School construction: The House provides $19.5 billion to build and repair school and university facilities. The money was stripped from the Senate bill.

Taxes:

—Alternative minimum tax: The Senate devotes $70 billion to "patch" the alternative minimum tax, saving more than 20 million taxpayers a 2009 tax increase averaging about $2,000. The House bill does not include that provision.

—Homebuyer tax credit: The Senate provides $35.5 billion for a $15,000 tax credit for purchasers of homes bought in the year after the bill takes effect. The House includes $2.6 billion and limits its smaller $7,500 credit to first-time homebuyers for homes purchased from Jan. 1, 2009 to July 1, 2009 and phases out the credit for couples making more than $150,000.

—Carbuyer tax deduction: The Senate devotes $11 billion to make interest payments on loans for new cars and automobile sales taxes deductible. The House bill does not.

Senate Pushing Its Version

Senator Ben Nelson, Democrat of Nebraska, said on NPR Monday that the Senate's version is the one that needs to be passed, instead of the House version.

And Maine Republican Susan Collins as well as Nelson, said Monday they believe the Senate's effort is the best that can be achieved in the current circumstances.

AP

"This bill is not perfect," Collins acknowledged in a nationally broadcast interview. "We're not claiming that. But in fact I think this bill will help to create 3.5 million jobs...We're facing a crisis and it makes no sense to have a partisan divide." She said the measure on balance is "a good bill. It is needed and I think it will make a difference."

Appearing with Collins on NBC's "Today" show, Nelson said, "I think the things we have focused on will help turn this economy around."

Obama Road Show

Trips Monday, Tuesday and Thursday to cities hurting under the economic meltdown and a prime-time news conference Monday night show that Obama and his advisers are worried about Tuesday's Senate vote on the stimulus bill, which failed to gather meaningful Republican support during rare weekend debate.

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Originally, aides had insisted his time would be better spent in Washington to shepherd the bill rather than traveling the more traditional presidential route around the country, pressuring lawmakers from his bully pulpit.

"The president's top man on the economy is the president," Larry Summers, the chairman of the White House National Economic Council, said on "Fox News Sunday." Summers added: "He listens to advice from all of us, and he sets his direction."

Obama was to return to Washington from Elkhart, Indiana after his town meeting there, for the news conference Monday night. On Tuesday he plans to visit Fort Myers, Fla., an area hit hard by foreclosures. And he'll visit Peoria, Illinois on Thursday, the White House announced Monday.

The Elkhart-Goshen region in northern Indiana saw its unemployment rate soar to 15.3 percent in December, up a whopping 10.6 percentage points from December 2007.

The region has been bruised by layoffs in the recreational vehicle industry. Hundreds of workers have lost their jobs at RV makers such as Monaco Coach Corp., Keystone RV Co. and Pilgrim International.

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