WASHINGTON (Reuters) - U.S. Senate Republicans on Tuesday offered their own, cheaper economic stimulus plans focused on tax cuts, pushing back against a nearly $900 billion Democratic plan they say encourages too much new spending.
As the Democratic-controlled Senate began thrashing out possible changes to the rescue package President Barack Obama has sought, Republicans indicated they may play hardball ahead of a vote that will require at least some Republican support.
“The American people are beginning to figure out what this package is, that it’s not a stimulus package — it’s a spending package,” said Sen. John McCain, an Arizona Republican who lost to Obama in the 2008 presidential election.
Senators worked throughout the day to find a bipartisan deal. McCain and four other Republicans unveiled their ideas priced at $445 billion, half the cost of Democratic version which started the day at $885 billion.
It centered on cutting in half a 6.2 percent payroll tax on employees, cutting the corporate tax rate to 25 percent from 35 percent and lowering the bottom two income tax brackets to 10 percent and 5 percent, all for one year.
McCain and Sens. Lindsey Graham of South Carolina, John Thune of South Dakota, Richard Burr of North Carolina and Mel Martinez of Florida also proposed $11 billion to help prevent home foreclosures and $65 billion in state grants to build and repair bridges and roads.
Obama hopes legislation to jump-start the ailing economy will be on his desk for signing into law by February 16 and there appeared to be strong public support for Congress to act. “We can’t afford to wait,” Obama told Fox News.
But how — and with how much money — remain subjects of contentious debate.
“We have a lot to do in just a little bit of time,” said Senate Majority Leader Harry Reid, who has said Democrats would consider Republican ideas but want to pass the bill by Friday.
Two Senate moderates, Nebraska Democrat Sen. Ben Nelson and Maine Republican Sen. Susan Collins, were working together to cut some spending measures that have been criticized as being ineffective and shift money to more construction projects.
The Senate approved two amendments, one by Republicans to strike a tax break for the television and movie industry to write off production costs. Lawmakers also agreed to make interest payments on car loans tax deductible for new purchases as sales have plummeted amid the credit crunch, a provision that would add about $11 billion to the tab.
According to a new public opinion survey by Gallup, 75 percent of Americans want Congress to pass an economic stimulus bill. But the public is divided over whether major changes should be made in bills moving through the House and Senate.
The Senate is debating a somewhat different version of a bill passed by the House of Representatives last week without any Republican support, despite Obama’s call for bipartisanship. The House bill would cost around $819 billion and the differences would have to eventually be worked out.
There were deep divisions between Republicans and Democrats over whether there was enough tax cuts and spending in the package, aimed at reversing soaring unemployment and ending a recession that began in December 2007.
Senate Democrats, who now have 58 of the 100 seats in the Senate, will need at least two Republican votes to avoid procedural roadblocks which could stymie the measure.
“I count the votes. I know the reality. We need Republican support to pass this measure, so we’re trying to find” a balance that will get that support, said Sen. Richard Durbin, an Illinois Democrat and assistant majority leader.
A first attempt by Democrats to expand spending on construction projects by an additional $25 billion failed in a test vote after Republicans objected to the cost. The bill already contained $27 billion for highway investments.
Sen. Dianne Feinstein, a California Democrat who backed the extra money, said she was concerned the Democratic package was “tax-cut heavy and doesn’t do what it should do” to create enough jobs.
But Senate Minority Leader Mitch McConnell, a Kentucky Republican, complained about “wasteful spending” and pushed another Republican plan.
His plan would provide cheap, 30-year fixed mortgages, at around 4 percent to homebuyers to help the hard-hit housing sector. It would also cut income tax rates for workers earning up to $67,900, whereas the existing legislation would provide up to $1,000 in tax credits to families.
Democrats and the White House said they would prefer bigger measures to tackle the housing crisis be taken in an existing financial industry bailout program and not necessarily in the economic stimulus.
Additional reporting by Thomas Ferraro and Susan Cornwell; editing by Todd Eastham and David Wiessler