updated 1/21/2009 8:41:22 PM ET 2009-01-22T01:41:22

President Barack Obama and the Democratic-controlled Congress pressed forward on two economic fronts Wednesday, working out details of a huge stimulus plan and pledging to spend billions of dollars from a financial bailout fund with greater controls and with more attention to the nation’s rising foreclosures.

Major Market Indices

Republicans, who said they were receptive to Obama’s call for a “unity of purpose,” promptly tested the day-old administration. They criticized Democratic spending initiatives and requested a meeting with the president to air their tax-cutting plans.

Congressional officials said a meeting was planned for next week.

The maneuvers illustrated Obama’s governing predicament: He wants to move swiftly to confront the troubled economy while also living up to a vow to break through the traditional partisan barriers.

Obama has ready access to $350 billion to help financial institutions loosen credit and extend loans to consumers and small businesses. At the same time, Congress is moving to give him at least $825 billion in spending and tax cuts to jolt the economy and create jobs.

On Wednesday, the House voted 260-166 to devote $40 billion to $100 billion of the financial sector bailout to reducing foreclosures. The legislation also would impose restrictions on executive pay at banks that receive the money and would require greater reporting on how the financial institutions spend the money.

Obama last week won permission from the Senate to spend the second half of the $700 billion Troubled Asset Relief Program after promising to abide by many of the same provisions in the House legislation. Still, House Financial Services Chairman Barney Frank, D-Mass., said the bill would give Congress more assurance that the goals and conditions would be met.

“It’s now legally theirs to spend without any constraint except for what we are able to impose on them through our efforts,” Frank said before the vote.

Republicans have criticized how the Bush administration spent the first half of the bailout fund and seemed in no mood to indicate that they approved of it now, even with the conditions. Of the 166 opponents, 156 were Republicans.

The two parties also clashed on the component parts of the $825 billion stimulus package.

“This package is no silver bullet,” House Appropriations Committee Chairman David Obey, D-Wis., cautioned. “What it is aimed at is staving off the worst aspects of this recession. ... I don’t know, frankly, if it will be adequate.”

Timothy Geithner, Obama’s nominee for secretary of the treasury, told senators the country needs a “forceful course” to meet the economic crisis.

“The ultimate costs of this crisis will be greater if we do not act with sufficient strength now,” Geithner told the Senate Finance Committee. “In a crisis of this magnitude, the most prudent course is the most forceful course.”

Congressional Republicans, meanwhile, insisted the package needed to be tilted more toward tax cuts.

“The challenge as we see it is to create a plan that helps middle-class taxpayers and small businesses without wasting money or exploding our national deficit,” House GOP leaders wrote in a letter to the White House.

The House Appropriations Committee spent the afternoon debating its $358 billion portion of the stimulus measure, with a partisan vote expected sometime Wednesday evening.

The sweeping plan blends traditional public works programs such as road and bridge construction and water and sewer projects with new ideas such as upgrading the nation’s electricity grid and investments in health care information technology systems.

The measure contains temporary spending increases for dozens of programs across the federal government. There’s money to weatherize poor people’s homes, boost spending for community health centers, relieve a backlog of construction projects at national parks and purchase buses for local mass transit agencies, just for starters.

“That’s a hell of a lot of money,” Rep. Rodney Frelinghuysen, R-N.J., said of a $6 billion weatherization program, a 30-fold increase.

Democrats touted a study by economist Mark Zandi, chief economist of Moody’s Economy.com, that predicts the House measure would create or preserve 4 million jobs. But Zandi’s study estimates that the entire stimulus measure would hit the economy over the next two years. In reality, the Congressional Budget Office predicts that much of the spending on infrastructure programs won’t reach the economy for years.

In an interview, Zandi said he prepared his analysis before CBO released its assessment.

“If the expenditures extend out beyond (2010) that would dilute the economic benefit,” he said.

Democrats, however, say three-quarters of the overall stimulus bill would be spent in the 18 months following its passage.

The sprawling spending measure came under attack from panel Republicans, who it would inundate federal agencies such as the Energy Department with money it can’t spend efficiently. They also questioned whether many of the other items in the bill would create jobs, such as $650 million to help adapt televisions to digital signals.

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

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
13.79%
Cash Back Cards 17.80%
17.78%
Rewards Cards 17.18%
17.17%
Source: Bankrate.com