January 27, 2009 / 1:17 PM / 9 years ago

Obama seeks Republican support for stimulus plans

<p>President Barack Obama speaks to reporters during his visit to the Capitol in Washington January 27, 2009. REUTERS/Kevin Lamarque</p>

WASHINGTON (Reuters) - Democratic President Barack Obama tried on Tuesday to placate Republicans in Congress who insist his $825 billion plan for reviving the U.S. economy should include bigger tax cuts.

“The key right now is to make sure that we keep politics to a minimum,” said the president, who met Republicans in both houses of Congress a week after taking office on a promise to seek consensus and end partisan gridlock.

Republicans complain Obama’s plan would finance Democratic pet projects -- such as $16 billion in grants for college students -- rather than create jobs or get people spending again.

“I think the president is sincere,” said House of Representatives Republican Leader John Boehner. “We look forward to continue to work with him to improve this package.”

Republicans agree the stumbling economy needs a rescue package. They complain the Democratic $550 billion spending proposal is excessive while a proposal to cut taxes by about $275 billion does not go far enough.

The Democratic-led House and Senate are expected to approve a package by the middle of February, regardless of how many Republicans embrace it.

Obama, who succeeded Republican President George W. Bush, needs the political cover that having some support from the opposition party would bring for an unproven plan that will hugely increase America’s budget deficit and may or may not stop a downward economic slide.

REPUBLICANS COMPLAIN

Some Republicans said their complaints were more with Democrats in Congress than with Obama.

An aide said the House Republicans’ message to Obama was: “We need your help to intervene with House Democrats and make changes to eliminate wasteful spending and increase tax relief and incorporate some of our ideas.”

“I think everybody there felt good ... that I was willing to explain how we put the package together, how we were thinking about it, and that we continue it welcome some good ideas,” Obama said.

Obama added: “The main message I have is that the statistics everyday underscore the urgency of the economic situation. The American people expect action.”

<p>President Barack Obama speaks to the press between meetings with Republican House and Senate leadership on Capitol Hill in Washington, January 27, 2009. REUTERS/Jason Reed</p>

The new president faces an economic crisis that seems to worsen by the day. U.S. consumer confidence slipped to a record low and major U.S. companies are cutting tens of thousands of jobs as financial industry troubles mount.

Obama faces jitters from some fellow Democrats as well.

With the House set to vote on its version of the plan on Wednesday, a co-chair of the coalition of fiscally conservative Democrats said his 50-member group had concerns.

TAX CUT CONCERNS

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Democratic Representative Charlie Melancon of Louisiana said his colleagues want Obama to promise that the record federal deficit is not further bloated by tax cuts.

They also want major reforms in mandatory government spending programs, like the Social Security retirement program and Medicare health care program for the elderly.

“The majority of us want to support the president and do a stimulus package,” Melancon told Reuters. “But we also have come to the realization that every day that we don’t get a commitment to reel in this spending that we’ve been doing without paying for it is a day ... that the problem gets worse.”

Obama’s aides have said three-quarters of the proposed new spending, on health care, education and building new roads and bridges, would work its way into the economy within 18 months.

A report by the nonpartisan Congressional Budget Office said it would take a bit longer. CBO estimated about 64 percent of the stimulus package would reach the economy within 19 months.

The Democratic tax cut plan would direct benefits more toward lower-income workers, even those who do not pay income taxes, while the House Republicans are pushing an alternative that they say would help all taxpayers.

Another issue expected to come up was the shaky condition of the U.S. financial system. Obama’s aides are looking at ways to help struggling homeowners and stem banking turmoil.

White House aides have not ruled out Obama seeking additional funds to help the financial sector beyond the $700 billion approved by Congress last October.

But the bailout program is unpopular with both parties so any request for more money could be a tough sell.

Additional reporting by Caren Bohan, Patrick Rucker, Donna Smith, Richard Cowan, Steve Holland, Susan Cornwell and Jeremy Pelofsky; Editing by David Wiessler

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