Comment E-mail Print

Page 2 of 2

Despite its size, the economic stimulus bill is not expected to face heavy opposition among Democrats, and Obama has won praise from Republicans for showing a willingness to show deference to their concerns. Senate Republican leader Mitch McConnell, R-Ky., floated a new proposal, raising the possibility of a two-year elimination of Social Security payroll taxes.

Obama got a boost during the day from Federal Reserve Chairman Ben Bernanke, who said in a speech in London that the emerging legislation could provide a "significant boost" to the sinking economy.

Bernanke also warned in remarks prepared for the London School of Economics that a recovery wouldn't last unless other steps were taken to stabilize the shaky financial system.

There was plenty of controversy surrounding Obama's decision to tap the $350 billion remaining from the financial bailout program that Congress created last fall, when the nation's credit markets ceased working and plunged an already weak economy into a tailspin.

President George W. Bush, acting at Obama's request, formally notified Congress on Monday that Treasury wanted to use the funds, but Congress can vote to block the move.

"It is clear that the financial system, although improved from where it was in September, is still fragile," the president-elect said Monday, making the case for use of the funds.

There was an element of political theater to the day's events. It is a foregone conclusion that Obama will be able to make use of the money as he tries to improve the economy. He could veto anti-bailout legislation if it came to that, and there are more than enough votes to uphold him.

"He said if for some reason it passed, he would veto it," Lieberman said.

But neither the president-elect nor fellow Democrats are eager to see that unfold, fearing it could damage Obama politically even before he takes the oath of office as the 44th president next Tuesday. "I don't think that's the way you start out a presidency," said Sen. Jay Rockefeller, D-W.Va.

Several Democrats said they found Obama persuasive, but added that they would wait to see his formal commitments.

"I feel much better," said Sen. Claire McCaskill, D-Mo., noting the president-elect's commitment to rectify several elements of the existing program.

Levin said Obama promised his administration would do a better job of accounting for how the money was disbursed, would make sure none of it went to pay for stockholder dividends, would enforce restrictions on the pay of corporate executives and more. He also said the president-elect had pledged to honor the commitments the Bush administration had made to prop up the beleaguered domestic auto industry.

It is not clear how much of the money will go toward helping hard-pressed homeowners, but in the House, Democrats were drafting legislation that would dedicate a minimum of $40 billion to that effort.

"If we do not get the second $350 billion, I do not see any way that we can get substantial foreclosure relief," said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. The housing measure is tentatively scheduled to come to a vote in the House on Thursday.

Rep. Spencer Bachus of Alabama, the committee's ranking Republican, questioned whether the money was necessary. The fund is becoming "a grab-bag where people can just reach in and get taxpayer money," he said.

------

Associated Press writers Andrew Taylor and Liz Sidoti contributed to this story.

>> Back -- Page 1 2

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

++ Discuss this topic in The Forum

This page has not been rated.