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Sparks fly as Senate to take on stimulus

As the U.S. Senate prepares to debate the future of the American economy this week, Republicans lobbed harsh salvos against the Democrats' plans Sunday amid a growing sense that the plan passed by the House last week is flawed. Everything's up for discussion, and almost any idea could win or lose. Officially, senators are considering an $889 billion stimulus package as economic news grows grimmer. Its hundreds of provisions reach into almost every aspect of American life — including workers' paychecks, local schools, digital television and modernizing medical records. Votes on specific proposals are likely to start Tuesday, with final passage by the end of the week.

GOP issues warning

Senate Republican leader Mitch McConnell of Kentucky said Sunday that the massive stimulus bill could go down to defeat if it's not stripped of unnecessary spending and focused more on housing issues and tax cuts.

Republicans are piecing together a housing package that could include a plan for the federal government to guarantee 4 percent mortgages and make them available for a limited amount of time. Current rates are around 5 percent. GOP lawmakers estimate that the average family would see its monthly mortgage payment drop by $466 a month, or $5,600 a year. Over the life of a 30-year loan, that's a savings of $167,760.

Sen. Chuck Schumer, D-N.Y., agreed that more could be done in the area of housing, though he said tapping money in the separate financial bailout fund would be a more likely way to pay for mortgage relief.

Obama is upbeat

President Obama says he is confident Republicans will come around to support the final version of his economic recovery, saying Sunday that he would like Republicans to eventually support the bill that passed the House last week without a single GOP vote. Obama says he expects some Senate Republicans to vote for it this week but said the important thing is that the bill pass, not the partisan vote tally. Beyond the expiration date of the stimulus bill, Obama and congressional Democrats say they hope to strike a grand bargain with Republicans to bring taxes and government spending back into balance over the next few years, taming budget deficits that threaten to spiral out of control. But fixing the budget would require a kind of joint political suicide, with Democrats agreeing to trim costly social programs and Republicans acquiescing to a major tax hike.

What's at stake

The stimulus is bigger than the Pentagon's entire budget. It's more than the United States has spent on the war in Iraq. Perhaps not since the Great Depression has Congress set out to expand and redefine so dramatically the government's role in the economy. The hope is that the economic contraction and job losses will be countered by a huge spike in federal spending and refundable tax credits. "We cannot delay this," Sen. Dick Durbin of Illinois, the Senate Democrats' No. 2 leader, said Sunday. Most economists agree that the unrelentingly bleak economy demands action, though some say the stimulus will stoke inflation and hinder future growth. "The effect of government debt is to lower the standard of living in the future," said Chris Edwards, an economist at the libertarian Cato Institute.

Times wires

Sparks fly as Senate to take on stimulus 02/01/09 [Last modified: Sunday, February 1, 2009 8:22pm]
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