Obama recovery plan advancing through House panels

[January 22, 2009]  WASHINGTON (AP) -- President Barack Obama's plan to award a $500 tax credit to most workers is expected to advance through a key House panel as Democrats prepare his $825 billion economic recovery plan for a floor vote next week.

Plans to extend and boost unemployment benefits, give states $87 billion to deal with Medicaid shortfalls and help unemployed people retain health care will also advance. Republicans are turning against Obama's economic stimulus program, despite promises by both Obama and Capitol Hill Republicans to work together.

At the same time, Timothy Geithner, Obama's nominee to become treasury secretary, was expected to win approval by the Senate Finance Committee on Thursday as well, despite acknowledging "careless mistakes" in failing to pay $34,000 in payroll taxes. His confirmation by the full Senate is expected soon.

The House version of Obama's "Making Work Pay" tax credit would give workers making $75,000 per year or less the full $500 tax credit; couples with incomes up to $150,000 a year would receive a $1,000 credit.

The plan being considered Thursday by the tax-writing Ways and Means Committee also would provide a temporary $2,500 tax credit to help pay for college. It would boost the earned income tax credit for low-income workers and permit them to receive the entire $1,000 per child tax credit as a refund in 2009-10 if they make as little as $8,500 a year and wouldn't otherwise qualify.

The panel would also provide $29 billion in tax cuts for businesses to invest in new plants and equipment and permit money-losing businesses to claim refunds on taxes paid up to five years ago, during profitable times. A raft of tax cuts to encourage the production of renewable energy are also in the measure.

On Wednesday night, a key piece of Obama's recovery program advanced through the House Appropriations Committee on a 35-22 party-line vote. The sweeping $358 billion spending measure 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.

"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."

The sprawling spending measure came under attack from panel Republicans, who said it would flood federal agencies such as the Energy Department with money they 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 people who get their television signals from local broadcast stations adapt to the conversion to digital signals.

White House budget chief Peter Orszag responded to criticisms stemming from a Congressional Budget Office analysis that the measure would not inject much infrastructure spending into the economy in the next several months. Orszag, who resigned from CBO the join the administration, said $3 of every $4 in the package should be spent within 18 months to have maximum impact on jobs and taxpayers.

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: his desire to move swiftly to confront the troubled economy while living up to a vow to break the traditional partisan barriers.

[Associated Press; By ANDREW TAYLOR]

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