Senate begins debate on stimulus bill

WASHINGTON - With the economy still spiraling downward, the Senate on Monday opened debate on an $885 billion stimulus plan that faces bipartisan questions about whether it spends too little on housing and infrastructure and too much on other things.

President Obama's ambitious plan is headed for more than a week of debate in the Senate, where it faces a stronger possibility of winning at least some bipartisan support than it had in the House. Not a single House Republican voted for it last week.

'We should trim things out'

Senate Republicans will propose a panoply of amendments to make the bill more palatable -- including moves to strip out spending they consider inappropriate in an economic stimulus bill. One such target: $75 million to help people quit smoking. Such changes, if accepted, could win support for the plan from conservative Democrats as well as Republicans. Both groups want to keep the program focused on short-term job creation.

Senate Republican Leader Mitch McConnell, R-Ky., suggested that Obama also believes the bill could be focused more sharply -- or that the president is at least open to compromise. "Republicans agree with President Obama that we should trim things out that don't put people back to work," McConnell said as he opened debate.

To increase the bill's focus on problems in the housing market, members of both parties are considering expanding a tax credit for first-time home buyers that was approved last year in other legislation but had little immediate impact. Under the reformulation being discussed, the credit would be doubled, to $15,000, and it would not have to be repaid, as the earlier measure required.

The home-buyer provision reflects a seeming paradox: Although Republicans and conservative Democrats say the bill's price tag is too high, the Senate probably will produce a bill more expensive than the House's $819 billion version.

The Obama administration is keen on passing the bill as soon as possible, not only to speed relief to the economy but to avoid having the plan become entangled in another, far more difficult and divisive issue: new action to shore up the financial system. Treasury Secretary Timothy Geithner is expected to lay out the framework of the administration's financial sector plan early next week.

Total cost shouldn't exceed $900B

Obama met with Democratic leaders Monday to discuss the stimulus bill and other legislation. A Democratic source said there was a consensus that when all possible changes to the bill have been decided, the total cost should not exceed $900 billion. That means some of the spending items would have to be jettisoned.

Congressional Democrats indicated that they would be willing to drop some of the business tax breaks in the bill, but that the administration wanted to keep them in hopes of attracting Republican support.

McConnell also said Republicans favor cutting the two lowest tax brackets as a way to " put money back in people's hands directly." It would reduce the tax rate from 10 percent to 5 percent for the first $8,350 in individual income for the current year, and $16,700 for couples. The tax rate would be lowered from 15 percent to 10 percent on income between $8,351 and $33,950 for individuals and between $16,001 and $67,900 for couples.

Obama and the Democrats favor a cut of $500 for workers and $1,000 for working couples, even if they do not earn enough to pay income taxes.

Once the Senate passes the bill, expected early next week, negotiators will have to iron out differences with the House version. Members of both parties say the House and Senate bills give short shrift to funding for highway construction and repair, the traditional cornerstone of efforts to spur job creation. Only $27 billion was included in the Senate bill for road projects. Sen. Dianne Feinstein, D-Calif., plans to propose another $25 billion for highway, transit and water projects.

The Washington Post contributed to this report.