WASHINGTON (Reuters) - The Democratic-led U.S. Congress took steps on Thursday to give President-elect Barack Obama the weapons he wants to fight a worsening economic recession by advancing legislation to provide nearly $1.2 trillion in emergency spending.
The House of Representatives and Senate worked on two separate but related tracks in an attempt to speed the money along and with an eye toward Obama’s inauguration on Tuesday as the 44th U.S. president.
House Democrats unveiled an $825 billion bill that would couple tax cuts and spending projects to try to jolt the economy out of a yearlong recession that appeared to be deepening.
Obama called the proposal “a significant downpayment on our most urgent challenges” and praised the House for moving ahead quickly, but Republicans criticized the high cost.
The Democratic bill could see changes between now and mid-February when the House and Senate hope to present it to Obama. It is unclear whether the overall price tag will rise.
Senators backed the incoming president when they voted to let him spend the $350 billion remaining in a $700 billion financial industry bailout fund created in October. That fund is formally known as TARP, the Troubled Asset Relief Program.
With the vote, the Treasury Department, under Obama, will have the authority to use the $350 billion, although the House might decide to stage a symbolic vote next week. Both chambers would have had to vote to block the funds.
The Senate’s 52-42 vote allowing the money to go forward came after a top economic aide to Obama, Lawrence Summers, issued a letter assuring the money would be more targeted and better managed than the Bush administration’s handling of the first $350 billion of bailout funds.
Underscoring the precarious situation of the U.S. financial sector because of the credit crisis resulting from a housing bust, the Senate’s vote came amid new developments involving two of the three largest U.S. banks.
Bank of America is in talks to receive about $15 billion in additional bailout funds, according to sources. There were also concerns that Citigroup Inc was having trouble coping with soaring credit losses.
Reporting by Richard Cowan, Jeremy Pelofsky and Kevin Drawbaugh; Editing by Peter Cooney