- The Washington Times - Thursday, February 5, 2009

President Obama sat down Wednesday individually with several senators seeking to cut billions of dollars from the economic recovery bill, even as the Congressional Budget Office said the legislation actually could leave the economy slightly worse in the long run.

A group of the nation’s mayors, meanwhile, emerged from a meeting with aides at the White House to scold Congress for arguing over what some legislators see as wasteful spending tucked into the $900 billion economic recovery bill.

“The senators need to stop business as usual here in Washington and get to work on a bill that can be presented to get people back to work. It’s as simple as that,” said Donald L. Plusquellic, mayor of Akron, Ohio, and an early Obama endorser during the Democratic primary.

The mayor, in Washington with a group from the National Conference of Mayors to urge quick action on the bill, said cities can’t wait for senators to “argue details” - though senators key to the bill’s passage were huddling with the president to do just that.

Also Wednesday, the Senate gave Republicans a victory by agreeing to an amendment to put into the stimulus bill a tax break for homebuyers of up to $15,000.

Sen. Johnny Isakson, the Georgia Republican who advanced the homebuyers tax break, said the $19 billion measure would help revive the housing industry by allowing a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break but only for first-time homebuyers.

The tax break was approved without opposition, though its fate remained uncertain as the stimulus measure still has a week or more of legislative wrangling to go through.

The CBO, the official scorekeeper for legislation, released its own analysis of the House and Senate bills, saying they will help in the short term but result in so much government debt that over time they would “crowd out” private investment, leading to a lower gross domestic product (GDP) over the next 10 years than if the government had done nothing.

“CBO’s basic assumption is that, in the long run, each dollar of additional debt crowds out about a third of a dollar’s worth of private domestic capital,” the CBO said.

The budget office said the bills would help GDP and save or create jobs in the short term, but estimated that under the Senate bill, GDP would be 0.1 percent to 0.3 percent lower by 2019 than if no action is taken.

“I can’t say I’m surprised,” said Sen. Saxby Chambliss, Georgia Republican. “We know that if you spend $1 trillion as is being proposed, you will probably have a huge increase in inflation that hurts GDP. That’s why spending our way out of this is not the way to go.”

About a dozen Senate Democrats have joined Republicans in seeking to scale back elements of the plan, including $198 million for payments to Filipino veterans of World War II, $122.5 million for new and renovated Coast Guard polar-class icebreaker vessels and $61 million for State Department diplomatic and consular programs.

Sen. Ben Nelson, Nebraska Democrat, said the president recognizes a “scrubbing” of the bill is needed to get enough votes for passage. He said the moderate coalition has been forged to create a sort of “job squad. This is about jobs, jobs, jobs.”

Sen. Susan Collins, Maine Republican, told reporters after meeting with the president that she thinks the White House should have written the stimulus bill instead of offering broad principles to Congress for it to craft the plan.

She said she gave Mr. Obama a list of spending she felt did not belong and should instead be subject to the regular budget process.

The senators said Mr. Obama had been amenable to their concerns, but his public comments twice on Wednesday suggested he was fed up with the negotiations.

“In the past few days I’ve heard criticisms of this plan that echo the very same failed theories that helped lead us into this crisis - the notion that tax cuts alone will solve all our problems; that we can ignore fundamental challenges like energy independence and the high cost of health care and still expect our economy and our country to thrive,” the president said during a policy announcement in the morning and a bill signing in the afternoon.

“I reject these theories, and by the way so did the American people when they went to the polls in November and voted resoundingly for change,” Mr. Obama said, urging Congress to “act without delay.”

On another contentious issue Wednesday, the Senate watered down a union-backed provision requiring that only U.S.-made iron or steel be used in the bill’s construction projects. A Republican effort to delete the “Buy American” requirement outright failed, but the Senate added to the bill a requirement that no U.S. trade deals could be broken.

Reporters asked White House press secretary Robert Gibbs about the president’s newly aggressive tone, and he said Mr. Obama is showing frustration because he understands “our failure to take action that is bold enough to meet the challenges that our economy faces, will simply result in far greater job loss for the American people.”

The Senate bill’s price tag ballooned to about $902 billion Tuesday night with the addition of $11 billion in tax incentives for new car purchases and $6.5 billion more for the National Institutes of Health. The final version of the bill was not expected to emerge until late in the week for a vote.

That bill will have to be reconciled with the House’s $819 billion version, which passed last week with no Republican support.

At an afternoon news conference, more than a dozen Republican House and Senate members vowed to stay united against the current legislation, which Sen. Jim DeMint called “probably the worst bill that has ever been introduced in the U.S. Congress.”

“We now have a chance to stop this bill,” said Mr. DeMint, South Carolina Republican. “This is not about obstruction; it’s about better ideas.”

Mr. DeMint is sponsoring legislation that consists entirely of tax cuts for individuals and businesses. Sen. John Thune, South Dakota Republican, said he plans to introduce the bill proposed by House Republicans - one that authors say would create 6.2 million jobs at half the cost of the Democrats’ plan - as an amendment.

Democratic leaders want the stimulus bill on the president’s desk by Feb. 13, when Congress takes a weeklong recess.

• Kara Rowland contributed to this report.

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