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UPDATE 4-Obama, Congress leaders to meet Monday on economy

(Adds “buy American” comments, paragraphs 2, 6-7)

WASHINGTON, Jan 2 (Reuters) - Both President-elect Barack Obama and Vice President-elect Joe Biden will huddle with Democratic and Republican congressional leaders on Monday to try to advance a huge economic stimulus bill that Obama hopes can be enacted quickly, despite Republican reservations.

Obama’s transition team said it is mulling “buy American” provisions for the stimulus package that could favor U.S. companies over foreign competitors.

Leadership aides in Congress said Obama’s meeting is set to begin around 3 p.m. EST (2000 GMT) on Monday.

But in the run-up to the meeting, Republicans on Capitol Hill were warning their Democratic counterparts that legislation to improve the worsening U.S. economy should not spend too much money on government-funded projects and should not be rushed through Congress without adequate review.

Democrats have been hoping to deliver the plan -- which could cost $675 billion to $775 billion or more -- to Obama on Jan. 20, the day he becomes president, or shortly thereafter.

One element of the plan could be “buy American” language benefiting U.S. industry. “We are reviewing the buy American proposal and we are committed to a plan that will save or create 3 million jobs including jobs in manufacturing,” Obama transition spokeswoman Jen Psaki said by e-mail.

The New York Times on Friday quoted Daniel DiMicco, chairman and chief executive of steel maker Nucor Corp, as saying the steel industry was asking Obama to “deal with the worst economic slowdown in our lifetime through a recovery program that has in every provision a ‘buy America’ clause.”

The newly elected Congress is to be sworn in on Tuesday -- two weeks before Obama. Hearings could push a final package well into February.

The Democrats, who have a majority in Congress, want the economic stimulus to include tax relief for the middle class and spending on schools, roads and other infrastructure. States, which increasingly are having difficulties paying health care costs for the poor, also would get federal money.


But Republicans have voiced concern about possible waste and say the tab could reach $1 trillion.

“I am concerned by media reports that suggest the Democrats’ emerging proposal may cost taxpayers up to 1 trillion in new government spending, with little debate or public scrutiny of the still-unseen legislation,” House Republican Leader John Boehner said in a statement on Friday.

“Let’s be clear: it is essential that this legislation be debated in a fair, open, and honest way,” he said.

At least five Democratic governors say $1 trillion is necessary. The five, from New York, New Jersey, Massachusetts, Ohio and Wisconsin, said on a conference call on Friday they would like the package to include $250 billion for education funding, $250 billion for social services such as the Medicaid health insurance program, and $500 billion for infrastructure.

Massachusetts Gov. Deval Patrick said infrastructure should be defined to include public housing, the power grid, and electronic medical records as well as roads and bridges.

Although the Democrats increased their majority in the 100-member Senate in the November election, they still need Republican support to advance legislation.

A Senate Republican aide, who asked not to be identified, said Democrats could gain stronger, bipartisan support with an economic stimulus measure costing less -- about $500 billion.

Global financial markets rallied on Friday, partly due to hope that a stimulus bill will move through Congress soon.

The meeting with Obama and Biden would include nine leaders from the Senate and House of Representatives, including House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, both Democrats. Republicans attending would include Boehner and Senate Minority Leader Mitch McConnell, aides said.

Republicans said although their numbers in the Senate and House were depleted in the election that brought Obama to power, they would not rubber-stamp a huge new spending plan.

“We hope that Democrats in Congress don’t attempt to shut the American taxpayer out of this process by trying to pass a bill that hasn’t been the subject of bipartisan review and that hasn’t been available for public inspection,” McConnell said in a statement on Friday.

He and Boehner have called for extensive hearings to scrutinize the economic plan. (Additional reporting by Richard Cowan and Lisa Lambert in Washington and Deborah Charles in Chicago; editing by Patricia Zengerle)