Video: Stimulus fight drags on

updated 2/5/2009 8:16:10 AM ET 2009-02-05T13:16:10

President Barack Obama warned on Thursday that failure to act on an economic recovery package could plunge the nation into a long-lasting recession that might prove irreversible, a fresh call to a recalcitrant Congress to move quickly.

In an op-ed in The Washington Post, the president argued that each day without his stimulus package, now exceeding $900 billion in the Senate, Americans lose more jobs, savings and homes. He painted a bleak picture if lawmakers do nothing.

"This recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse," Obama wrote in the op-ed titled, "The Action Americans Need."

Senate Democratic leaders hope for passage of the legislation by Friday at the latest, although prospects appear to hinge on crafting a series of spending reductions that would make the bill more palatable to centrists in both parties.

Obama rejected the argument that more tax cuts are needed in the plan and that piecemeal measures would be sufficient, arguing that Americans made their intentions clear in the election.

Video: Who creates jobs? "I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change," he wrote.

Historically huge to begin with, economic stimulus legislation is growing larger by the day in the Senate, where the addition of a new tax break for homebuyers sent the price tag well past $900 billion.

"It is time to fix housing first," Sen. Johnny Isakson, R-Ga., said Wednesday night as the Senate agreed without controversy to add the new tax break to the stimulus measure, at an estimated cost of nearly $19 billion.

The tax break was the most notable attempt to date to add help for the crippled housing industry and gave Republicans a victory as they work to remake the legislation more to their liking.

Video: Local demand for stimulus confronts D.C. politics Three swing-vote senators met with Obama at the White House on Wednesday to discuss possible cutbacks, but they declined to discuss details of their talks. Obama has made the legislation a cornerstone of his recovery plan.

For their part, Senate Republicans signaled they would persist in their efforts to reduce spending in the measure, to add tax cuts and reduce the cost of mortgages for millions of homeowners.

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Officials figures were unavailable, but it appeared that the measure carried a price tag of more than $920 billion, making it bigger than the financial industry bailout that passed last year and as large as any measure in memory.

Despite bipartisan concerns about the cost, Republicans failed in a series of attempts on Wednesday to cut back the bill's size.

Video: GOP ‘working group’ offers alternative stimulus The most sweeping proposal, advanced by Sen. Jim DeMint, R-S.C., would have eliminated all the spending and replaced it with a series of tax cuts. It was defeated 61-36.

Democrats also upheld a so-called Buy American provision that requires projects financed by the measure to be built with domestically produced iron and steel.

But with Obama voicing concern about the provision, the requirement was changed to specify that U.S. international trade agreements not to be violated.

Additionally, Democrats turned back an attempt to strip out a provision that Obama has said was essential. It would provide a tax cut of up to $1,000 for working couples, including those who do not make enough to pay income taxes.

Isakson said the new tax break for homebuyers was intended to help revive the housing industry, which has virtually collapsed in the wake of a credit crisis that began last fall.

Cost estimated at $19 billion
The proposal would allow 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.

Isakson's office said the proposal would cost the government an estimated $19 billion.

The provision was the second tax cut approved in as many days targeted to individual industries. On Tuesday, the Senate voted to give a break to consumers who buy new cars.

The House approved its own version of the bill last week.

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

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