Obama seeks action as parties try to pare stimulus

By DAVID ESPO, AP Special Correspondent

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WASHINGTON – Senate moderates worked to cut tens of billions of dollars from economic stimulus legislation Thursday in hopes of clearing the way for passage as the government spit out grim new jobless figures and President Barack Obama warned of more bad news ahead.

With partisan tensions rising, a Republican alternative with higher tax cuts and far less spending than the administration favors was defeated on a pure party-line vote, 57-40. Other GOP attempts to make significant changes in the bill appeared doomed, as well.

"The time for talk is over. The time for action is now," declared Obama as the Senate plodded through a fourth day of debate on the legislation. He implored lawmakers in both parties to "rise to this moment."

Obama added he would "love to see additional improvements" in the bill, a gesture to the moderates from both parties who were at work trying to trim the $920 billion price tag.

Increasingly, the events that mattered most were not the long roll calls on the Senate floor, but the private conversations in which the White House and Democratic leaders sought — either with the support of a large group of centrist lawmakers or without them — to clear the bill at the heart of the president's recovery program.

"As I have explained to people in that group, they cannot hold the president of the United States hostage," said Majority Leader Harry Reid, D-Nev. "If they think they're going to rewrite this bill and Barack Obama is going to walk away from what he is trying to do for the American people, they've got another thought coming."

Republicans countered that neither the president nor Democratic congressional leaders have been willing to seek common ground on the first major bill of the new administration.

"We're not having meaningful negotiations. ... It's a bad way to start," said Sen. John McCain of Arizona, who was Obama's opponent in last fall's presidential campaign.

In an Associated Press interview, he said Obama "gave the Democrats the leeway to basically shut out Republicans starting with the House and now here in the Senate, and I don't think that's good."

McCain's penchant for working across party lines has irritated fellow Republicans in the past, but he was not taking part in bipartisan talks on trimming the stimulus bill.

Instead, he advanced an alternative that highlighted the differences between the two political parties.

It carried a price tag of $421 billion, less than half the White House-backed measure. The majority of that was in the form of a one-year cut in the payroll tax and reductions in the two lowest income tax brackets.

The proposal also included provisions to help the battered housing industry, including the $15,000 tax credit for home buyers that passed separately on Wednesday.

Nearly 20 senators from both parties met twice during the day and reviewed a list of possible cuts totaling nearly $80 billion. They included elimination of at least $40 billion in aid to the states, which have budget crises of their own, as well as $1.4 billion ticketed for the National Science Foundation.

There was no sign the group of self-appointed compromisers had agreed to support the reductions, but even if they had the numbers were far short of what some were looking for.

"The president made a strong case for a proposal that would be in the neighborhood of $800 billion," said Sen. Susan Collins, R-Maine, who met with Obama at the White House on Wednesday.

The legislation is a blend of federal spending and tax cuts that supporters say can create or preserve at least 3 million jobs. They cite the tax cuts for lower-income workers, as well as more money for jobless benefits, worker training, food stamps, health care, education and public works projects such as highways and mass transit.

Critics contend the bill is bloated with spending for items that won't create jobs, such as smoking prevention programs or efforts to combat a future pandemic flu outbreak.

And while polls show Obama is popular and the public supports recovery legislation, Republicans have maneuvered in the past several days to identify and ridicule relatively small items in the bill.

Whatever the public relations battle, Republicans have tried without success so far to reduce spending in the measure and were ready with additional attempts during the day.

The legislation is a key early test for Obama, who has been in office just two weeks and has made economic recovery his top priority.

His warnings have become increasingly dire, and in remarks to employees at the Department of Energy, he said, "Today, we learned that last week the number of new unemployment claims jumped — jumped to 626,000. Tomorrow, we're expecting another dismal jobs report on top of the 2.6 million jobs that we lost last year. We've lost 500,000 jobs each month for the last two months."

The new jobless claims were reported by the Labor Department, and the total was the highest since October 1982, when the economy was in a steep recession.

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