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Tensions rise between Obama, Senate GOP over stimulus

WASHINGTON - President Barack Obama and Senate Republicans bickered yesterday over his historically huge economic recovery plan after states and schools lost tens of billions of dollars in a late-night compromise.

The $827-billion measure is on track to pass the Senate Tuesday despite stiff opposition from the GOP and disappointment among Democrats, including the new president, who labeled it imperfect.

"We can't afford to make perfect the enemy of the absolutely necessary," Obama said in his weekly radio and Internet address.

Still, the popular president -- six in 10 voters approve of his performance so far -- scolded Republicans, with a pointed reminder that Democrats, not Republicans, had won in November.

Hours later, the Senate convened a rare Saturday session to debate a compromise forged between GOP moderates and the White House on Friday, a rare burst of comity aimed at securing the bill's passage with a few Republican votes joining the Democratic majority.

The compromise stripped $108 billion in spending from Obama's plan, including cutbacks in projects that likely would give the economy a quick lift, like $40 billion in aid to state governments for education and other programs.

Yet it retained items that also probably won't help the economy much, such as $650 million to help people without cable receive digital signals through their old-fashioned televisions, or $1 billion to fix problems with the 2010 Census.

Among the most difficult cuts for the White House and its liberal allies to accept was the elimination of $40 billion in aid to states, money economists say is a relatively efficient way to pump up the economy by preventing layoffs, cuts in services or tax increases.

"It reduces a number of highly stimulative items like state fiscal relief ... and largely substitutes for it some large tax cuts that are highly ineffective as stimulus," said Bob Greenstein, founder of the liberal Center on Budget and Policy Priorities. "So your net result is a bill that gets significantly less bang for the buck."

For all the talk of cuts, the bill retains the core of Obama's plan, designed to ease the worst economic recession in generations by combining hundreds of billions of dollars in spending to boost consumption by the public sector with tax cuts designed to increase consumer spending.

While publicly supportive of the bill, White House officials and top Democrats said they were disappointed so much money was cut, including almost $20 billion for construction and repair of schools and university facilities. Those funds would have supported many construction jobs.

The $827-billion package debated yesterday -- down from a $937-billion or so version debated during the week -- included Obama's signature tax cut of up to $1,000 for working couples. Also included is a tax credit of up to $15,000 for home buyers and smaller breaks for people buying new cars.

Obama himself acknowledged the bill was far from perfect but said it would be too dangerous to leave it lifeless on the table. "In the midst of our greatest economic crisis since the Great Depression, the American people were hoping that Congress would begin to confront the great challenges we face," Obama said before departing for his first trip to Camp David.

Lawmakers were already looking ahead to House and Senate talks, where a handful of GOP moderates such as Susan Collins of Maine and Arlen Specter of Pennsylvania -- whose votes are crucial -- seemed to have the upper hand against House Democrats unhappy with changes such as curbing increases for early childhood education and subsidies to bring the Internet to rural areas.

The Senate heads toward a key vote tomorrow. If, as expected, the bill passes, lawmakers will need to resolve differences between the Senate and House bills before sending a final package to Obama.

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