Lawmakers Seek to Revise Stimulus Bill as Senate Debate Begins

By Brian Faler

Feb. 3 (Bloomberg) -- Democrats and Republicans are seeking changes worth tens of billions of dollars to President Barack Obama’s economic-stimulus package as the U.S. Senate began debate yesterday on the plan.

Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, said lawmakers from both parties are developing plans to redirect at least $50 billion to aid the ailing housing industry. Another Democrat, Ben Nelson of Nebraska, said he and other senators are preparing an amendment to cut “tens of billions” of dollars in spending in the plan, saying they doubt it would do much to help the economy.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, said Democrats are ignoring Obama’s call, made in an interview with NBC television, to incorporate Republican ideas in the plan. “The way to build this package is, indeed, to do it on a bipartisan basis, which doesn’t mean just talking to us but including ideas that we think would work,” McConnell said.

Obama discounted the differences over the stimulus legislation, calling them “very modest.” Democratic congressional leaders met with him yesterday at the White House about the measure. A White House statement said, “They agreed on the urgency of passing effective legislation in the short term and committed to continue working together to achieve the bipartisan consensus” that Obama has sought.

The Senate began work on the bill in hopes of getting a measure to Obama’s desk by mid-February. Senate Majority Leader Harry Reid, a Nevada Democrat, said there will be a number of votes today on amendments. The House passed its version of the bill last week without any Republican votes.

Quicker Impact

Democrats, buffeted by complaints the House plan would take too long to boost the economy, got some good news yesterday when the nonpartisan Congressional Budget Office said the Senate’s version would have a quicker impact. The agency said the Senate’s plan, which it estimated would cost $885 billion, would pump about $700 billion into the economy by the end of next year.

That would amount to almost 80 percent of the package. Obama has said his goal is to have three-quarters of the money funneled into the economy within 18 months. The CBO said the House bill would inject about 64 percent of its package into the economy by the end of 2010.

Reid said lawmakers will vote first on an amendment sponsored by Senator Patty Murray, a Democrat from Washington State, which would increase funding for highway, mass transit and water infrastructure projects by $25 billion. That would boost highway funding in the bill to $40 billion from $27 billion.

Projects on Hold

“Construction projects across the country have been put on hold because states simply don’t have the money,” said Murray. “This amendment invests in tried-and-true projects that get laid-off workers back on the job.”

Jim Manley, a Reid spokesman, said he didn’t know what other amendments would get a vote today.

Conrad said he and about eight other senators form a bipartisan group of lawmakers who want at least $50 billion within the stimulus package for programs aimed at fighting housing foreclosures.

“We are really trying to reduce things that have less value in terms of stimulus and investment and move it into a place where we know we really need the money,” he said. Conrad said the lawmakers haven’t agreed on what they would try to cut in the bill to make room for their proposal.

Cutting Spending

Nelson, who complained the plan includes funds to develop environmentally sensitive spacecraft, said “more than a handful” of lawmakers are working on a plan to reduce spending. Nelson, who said he won’t support the stimulus plan as it is currently written, declined to provide specifics.

McConnell said the plan doesn’t include enough tax cuts or mortgage relief. Republicans are considering offering an amendment that would temporarily offer mortgages with fixed rates between 4 percent and 4.5 percent to homebuyers and homeowners wanting to refinance. The plan would direct Fannie Mae and Freddie Mac to buy the loans to encourage banks to make them.

Republicans believe “that a stimulus bill must fix the main problem first, and that’s housing -- that’s how all of this began,” he said.

McConnell warned Democrats against expanding the stimulus package, saying many of his colleagues believe it is already too big. He also criticized “Buy American” provisions in the bill that would require iron and steel used in projects funded by the measure to be American-made.

“I don’t think we ought to use a measure that is supposed to be timely, temporary and targeted to set off trade wars,” he said. “It’s a very bad idea.”

To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net