Obama tells Congress it’s time to act on economic stimulus plan

WASHINGTON —  Senate leaders called off plans to vote on President Obama’s economic recovery plan Thursday night in hopes that a group of centrist lawmakers from both parties would be able to fashion a compromise to cut the cost of the $937-billion bill and win support from at least a few Republicans.

After a long day of behind-the-scenes negotiations, Senate Majority Leader Harry Reid (D-Nev.) dropped plans to hold a final vote on the bill as the bipartisan group of centrists worked into the night to trim as much as $100 billion, an attempt to bring moderate Republicans on board without driving Democrats away.

The stimulus bill is a cornerstone of Obama’s efforts to revive the economy. But his hopes for bipartisan support have faded amid Republican complaints that it is laden with spending that does not promote job creation and that it does not offer enough tax cuts.

The House passed the legislation without a single Republican vote, and the price of the bill has grown by about $100 billion since reaching the Senate.

On Thursday, the Senate rejected a full-scale alternative proposed by Arizona Sen. John McCain -- Obama’s Republican rival in the presidential campaign -- that would provide more tax cuts and less spending than Obama wants.

If the overnight effort to find a bipartisan compromise fails, Reid said, the final vote may not come until early next week.

Obama’s personal and political prestige are on the line because he has been deeply involved in lobbying reluctant senators and trying to reach out to Republicans. The president showed a flash of impatience Thursday morning, saying: “The time for talk is over. The time for action is now.”

Speaking in the evening to House Democrats holding a retreat in Williamsburg, Va., Obama warned that without swift action on the bill, “an economy that is already in crisis will be faced with catastrophe.”

Obama will have another opportunity to ratchet up pressure on Congress on Monday, when he holds his first prime-time TV news conference as president.

Once the Senate votes, the bill may still be substantially revised in a conference committee to reconcile differences between the Senate and House versions of the legislation.

The bill is a sweeping package of tax breaks for individuals and for businesses intended to spur economic growth; expanded benefits for the unemployed; aid to states to help maintain health and education services; and funding for highway repairs and other infrastructure projects.

It also includes a hodgepodge of other items, such as spending for increased broadband access in rural areas and for computerizing medical records, which Democrats say will modernize the economy and contribute to long-term growth.

The tenor of debate grew more partisan Thursday, with Republicans sharpening their criticism of the bill and Democrats accusing the GOP of rebuffing Obama’s gestures of bipartisanship.

“This bill stinks,” said Sen. Lindsey Graham (R-S.C.).

Sen. Charles E. Schumer (D-N.Y.) said GOP opposition demonstrated that “the hard right still has a stranglehold on most Republicans.”

When the Senate considered McCain’s alternative, which would have cut the price tag to $421 billion, the vote split on party lines, 57 to 40.

Another marquee GOP amendment -- a proposal designed to bolster the housing market -- drew support only from Republicans.

The proposal, drafted by Sen. John Ensign (R-Nev.), would have provided government-backed mortgages at a 4% fixed rate, a plan that would cost $300 billion or more.

The Senate this week adopted a different measure intended to help the housing market: a $15,000 home buyers’ tax credit for people purchasing their primary residence. That is up from $7,500, which currently is available only to first-time home buyers and has to be repaid.

All week, debate in the Senate has featured an oasis of bipartisanship in the group of centrists headed by Sens. Susan Collins (R-Maine) and Ben Nelson (D-Neb.).

Collins said she was aiming to keep the package below $800 billion, but that may be too large a cut to retain Democratic support.

“It’s very difficult because everyone has certain pet programs in the bill,” Collins said. Among the items they are considering cutting are National Science Foundation spending, school construction money and Amtrak funding.

For all the complaints about the bill’s spiraling price tag, most of the changes made during the Senate debate have added to the cost, not whittled it.

As it came to the floor, the bill cost $885 billion, including $70 billion that the finance committee added to the House bill to prevent thousands of middle-income taxpayers from having to pay higher taxes because of the alternative minimum tax.

The $15,000 home buyers’ tax credit, sponsored by Sen. Johnny Isakson (R-Ga.), added $19 billion. The Senate also added $6.5 billion for biomedical research.

The Senate changes, most with Republican support, drove the price perilously close to the $1-trillion mark. Despite the fact that those additions were supported and even introduced by Republicans, the core of their opposition to the bill is that it includes too much spending and not enough tax cuts.

“If you started the day Jesus Christ was born and spent $1 million every day since then, you still wouldn’t have spent $1 trillion,” said Senate Minority Leader Mitch McConnell (R-Ky.).

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janet.hook@latimes.com

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Maura Reynolds, Noam Levey, Richard Simon and Christi Parsons in the Washington bureau contributed to this report.