Obama economic recovery plan advancing through House

Published: Thursday, January 22, 2009 at 2:19 p.m.
Last Modified: Thursday, January 22, 2009 at 2:19 p.m.

WASHINGTON President Barack Obama's economic recovery plan, including proposals to award a $500 tax credit to most workers and to help the laid-off hang onto their health insurance, met Republican resistance Thursday as it began moving through the House.

At the same time, the House cast a strong bipartisan vote, though symbolic, to reject Obama's request for the unspent $350 billion in a bailout fund for the financial sector. The 270-155 vote was a moot point because the Senate refused to block the release of the money last week. That effectively made it available to the new administration.

But the vote illustrated the difficulties facing Obama as he moves ahead to spend the bailout money without irritating public opinion. House members in both parties have been under pressure to oppose more bailout spending.

On the economic stimulus package, two House committees prepared Obama's $825 billion-plus package for a floor vote next week amid clear signs that the measure was not picking up the level of GOP support that Obama was hoping for.

And some Democrats expressed frustration at a separate hearing Thursday that the bill doesn't do enough to rebuild America's crumbling infrastructure. Just $30 billion is reserved for highway repair and construction.

"This bill ... is not even near what we need for short-term needs and it does not in any meaningful way address the long-term needs for our country," griped Rep. Peter DeFazio, D-Ore., at a Transportation panel hearing. "But it is better than nothing."

Obama's plans to extend and boost unemployment benefits, give states $87 billion to deal with Medicaid shortfalls and help unemployed people retain health care, were advancing through two other panels. But Republicans are turning against Obama's economic stimulus program, despite promises by both the president and GOP lawmakers to work together.

House Minority Whip Eric Cantor said on CBS's "The Early Show" that Republicans want to cooperate with the new administration to help restore the faltering economy, but that many facets of the program being pushed by majority Democrats would fail to create new jobs.

House Energy and Commerce Chairman Henry Waxman, D-Calif., said provisions temporarily subsidizing health insurance coverage for the unemployed or giving them coverage through Medicaid were critically needed.

"If we don't act now, the recession will accelerate," Waxman said. "Over 6 million people will lose their health insurance, states will cut Medicaid and sick, chronically ill and disabled Americans will be hurt."

At the same time, Timothy Geithner, Obama's nominee to become treasury secretary, won approval by the Senate Finance Committee on Thursday despite acknowledging "careless mistakes" in failing to pay $34,000 in payroll taxes. His confirmation by the full Senate is expected soon.

The House version of Obama's "Making Work Pay" tax credit would give workers making $75,000 per year or less the full $500 tax credit; couples with incomes up to $150,000 a year would receive a $1,000 credit.

The plan being considered Thursday by the tax-writing Ways and Means Committee also would provide a temporary $2,500 tax credit to help pay for college. It would boost the earned income tax credit for low-income workers and permit them to receive the entire $1,000 per child tax credit as a refund in 2009-10 if they make as little as $8,500 a year and wouldn't otherwise qualify.

The panel would also provide $29 billion in tax cuts for businesses to invest in new plants and equipment and permit money-losing businesses to claim refunds on taxes paid up to five years ago, during profitable times. A raft of tax cuts to encourage the production of renewable energy are also in the measure.

On Wednesday night, a key piece of Obama's recovery program advanced through the House Appropriations Committee on a 35-22 party-line vote. The sweeping $358 billion spending measure blends traditional public works programs such as road and bridge construction and water and sewer projects with new ideas such as upgrading the nation's electricity grid and investments in health care information technology systems.

Asked about early partisan votes in shaping the stimulus package, House Speaker Nancy Pelosi, D-Calif., said Obama is making an effort at bipartisanship by meeting with the congressional leaders from both parties on Friday and with House Republicans next week.

Whether the bill is bipartisan, she said, "just depends on how Republicans vote."

Thursday's House vote to block the release of the remaining financial bailout funds was less a rejection of Obama economic strategy than a reflection of deep public antipathy for the bailout program, which Congress set up last fall at the request of the Bush administration.

The public opposition was especially felt in the House, where members must seek re-election every two years.

The vote came a day after the House voted 260-166 to set greater reporting requirements on banks that receive bailout funds. House Financial Services Chairman Barney Frank, D-Mass., who supported releasing the funds, conceded Thursday's vote was moot.

"Why are we still voting on it?" he asked. "Because there is a degree of anger in the American public at what they think is a very unfair system that gives benefits unduly and disproportionately to some of those who caused the problem, while denying health care and unemployment compensation and a decent higher education for working-class people."

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