Obama seeks major tax cuts in stimulus plan

By Thomas Ferraro

WASHINGTON (Reuters) - President-elect Barack Obama, seeking to drum up support from both political parties, plans to propose up to $310 billion in tax cuts for businesses and the middle class as part of his massive economic stimulus package, senior Democratic aides said on Sunday.

Obama intends to discuss his proposal during private meetings on Monday with Democratic and Republican leaders of the Senate and House of Representatives, the aides said.

Joined by Vice President-elect Joe Biden, Obama will seek swift passage of the measure to stem a deepening U.S. economic recession.

With the new Congress set to convene on Tuesday, Senate Majority Leader Harry Reid vowed to find common ground with wary Republicans on a rescue package of tax cuts and new spending on such basics as roads, bridges and schools.

"Whatever we do must be done on a bipartisan basis," Reid told NBC's "Meet the Press" program, acknowledging Senate Republican support would be needed to move legislation.

House Speaker Nancy Pelosi, a California Democrat, "is supportive" of Obama's proposed tax relief, most of which would be directed at the middle class, but details must be worked out, one Democratic aide said.

The package would contain up to $310 billion in tax cuts for businesses and middle-class workers, equivalent to 40 percent of the $775 billion rescue package, the aide said.

Another Democratic aide said: "Nothing has been finalized."

The tax relief is aimed at attracting support from fiscal conservatives in Congress, who prefer cutting taxes to increasing federal spending.

Obama and congressional Democrats were also considering a huge expansion of federal health care insurance and unemployment benefits as part of a two-year recovery program, another senior party aide said.

Democrats concede hopes of having a package ready for Obama to sign when he takes office on January 20 have proved to be too optimistic. House Majority Leader Steny Hoyer told "Fox News Sunday" program the signing may slide until mid-February.

Obama spokesman Robert Gibbs said Monday's meetings with congressional leaders were designed to get legitimate bipartisan input and to convey a sense of urgency.

DEMOCRATS UNDER PRESSURE

Senate Republican Leader Mitch McConnell voiced concerns about how quickly Democrats may try to push a stimulus package and what spending proposals may be included in it. He also suggested federal funds be loaned rather than given to states.

But McConnell said Obama could ultimately win broad Republican support if Republicans are provided a fair opportunity to shape it.