UPDATE 1-US House to push $500 billion stimulus bill

Mon Dec 1, 2008 3:07pm EST

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(Recasts with $500 billion price tag and adds other details)

By Richard Cowan

WASHINGTON Dec 1 (Reuters) - U.S. House of Representatives Speaker Nancy Pelosi met leading governors on Monday to discuss the size and shape of an economic stimulus package that one Democratic aide said was likely to cost around $500 billion.

The aide, who asked not to be identified, said the legislation would include a middle-class tax cut, billions of dollars for road, bridge and mass transit construction, expanded aid to states and investments in renewable energy.

Speaking to reporters earlier, Pelosi said she hoped the job-creating legislation, which she did not detail, would be ready for President-elect Barack Obama to sign when he takes office on Jan. 20.

"We'd like to have it ready for the president-elect," Pelosi told reporters before meeting Govs. Ed Rendell, a Pennsylvania Democrat, and Jim Douglas, a Vermont Republican. "I think we will be coming to some agreements today."

Rendell chairs the National Governors Association and Douglas is the vice chairman. Obama and Vice President-elect Joe Biden will meet U.S. governors in Philadelphia on Tuesday to discuss the economic crisis.

The House passed a $61 billion stimulus in September but opposition from Senate Republicans backed by a Bush administration veto threat killed the bill in the Senate.

Pelosi's meeting with the governors came as the National Bureau of Economic Research said the U.S. economy entered a recession in December, 2007.

U.S. unemployment has been rising, the financial industry is reeling even with the recent enactment of a $700 billion government bailout, and Congress must decide whether to rescue domestic automakers, who face a Tuesday deadline to provide Washington with restructuring plans.

Governors and state legislatures are asking Congress to act quickly on an aid and job-creation bill, noting they face severe budget shortfalls in 2009 and 2010.

At $500 billion, the measure would dwarf the $168 billion economic stimulus that was enacted last February, which consisted mostly of tax rebates for families and small business tax benefits.

The new emergency spending would add to spiraling government spending which sent the budget deficit to a record $455 billion in the fiscal year that ended Sept. 30.

Hoping to blunt Republican criticism that Democrats are cobbling together a massive bill full of wasteful spending, Pelosi said the measure would be aimed at "creating jobs for the 21st century," with a focus on energy projects.

Obama has said that his first priority when taking office would be signing an economic stimulus bill into law. (Editing by Alan Elsner)

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