GOP senators ready for a stimulus fight

Senate Republican leader Mitch McConnell said Sunday that the massive stimulus bill backed by President Obama and congressional Democrats could go down to defeat if it was not stripped of unnecessary spending and focused more on housing and tax cuts.

The Senate version of the bill, which tops out at nearly $900 billion, is headed to the floor for debate. The House bill totaled about $819 billion and earned no Republican votes, although it easily passed the Democratic-controlled House. At some point, lawmakers will need to compromise on the competing versions.

McConnell said Republicans would recommend that creditworthy home buyers be allowed to “buy down their mortgages” to save, on average, $5,600 a year. “Let’s fix housing first; that’s what started all of this,” he said.

Sen. Charles E. Schumer (D-N.Y.) indicated that his party was receptive to such proposals, including doubling a $7,500 tax credit for new home buyers to $15,000. He added that reducing the mortgage interest rate to 4.5% was “a good idea.”

But McConnell and other Republicans suggested the bill needed an overhaul because it didn’t pump enough into the private sector through tax cuts and allowed Democrats to go on a spending spree that was unlikely to jolt the economy. The Republican leader also complained that Democrats had not been as bipartisan in writing the bill as Obama had said he wanted.

“I think it may be time . . . for the president to kind of get a hold of these Democrats in the Senate and the House, who have rather significant majorities, and shake them a little bit and say, ‘Look, let’s do this the right way,’ ” McConnell said.

Obama said he was confident Republicans would support the final version of the legislation. He and Vice President Joe Biden will meet with congressional leaders at the White House this afternoon.

The president repeated what aides and officials have been telling reporters: that the final package would be close to its objectives -- to save or create 3 million to 4 million jobs -- and Republicans would back it.

“I am confident that by the time we have the final package on the floor that we are going to see substantial support, and people are going to see this is a serious effort. It has no earmarks. We are going to be trimming out things that are not relevant to putting people back to work right now,” Obama said.

He declined to predict how many Senate Republicans might back the bill.

“Look, the important thing is getting the thing passed,” Obama told NBC’s Matt Lauer during a pre-Super Bowl interview. “And I’ve done extraordinary outreach, I think, to Republicans because they have some good ideas and I want to make sure those ideas are incorporated.”

Obama also said his administration would announce plans to spend the second $350 billion of a bank bailout after Congress deals with the separate economic recovery plan.

Under Obama’s plan, strained state budgets would receive a cash infusion, projects for roads and other infrastructure would be funded and “green jobs” in the energy sector would be created.

In its centerpiece tax cut, single workers would gain $500 and couples $1,000, even if they don’t earn enough to owe federal income taxes.

But Jon Kyl of Arizona, the No. 2 Republican in the Senate, said he was seeing an erosion of support for the bill and suggested that lawmakers should consider starting over.

“When I say start from scratch, what I mean is that the basic approach of this bill, we believe, is wrong,” Kyl said.

Among the major changes Kyl said were needed was the tax rebate for individuals and couples, which he said went to too many people who didn’t pay the tax to start with.

Sen. Jim DeMint (R-S.C.) characterized the proposal as “a spending plan. It’s not a stimulus plan. It’s temporary, and it’s wasteful.”

Nonetheless, Schumer predicted that the bill would gain some Republican support. “The more the better,” he said. “But I will say this: I’d rather have a really good bill that helps our economy get out of this mess with 65 votes than dilute the bill and get 80 votes.”

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said the bill was designed to help people as well as to stimulate the economy.

“I never saw a tax cut fix a bridge. I never saw a tax cut give us more public transportation. The fact is, we need a mix,” Frank said.

Kyl appeared on “Fox News Sunday,” DeMint and Frank were on ABC’s “This Week,” and McConnell and Schumer were on CBS’ “Face the Nation.”