President-elect Barack Obama told Democratic senators in a closed lunch today that he needs the second $350 billion authorized by Congress as part of the TARP legislation last year and that he'll veto any move by Congress to cut that funding off.
And Obama was not the only member of the incoming administration trying to sell his plan to Democrats today on Capitol Hill.
Larry Summers, the incoming leader of Obama's National Economic Council, met this morning with Democrats on the Senate Finance Committee to get more of their input on the $700 billion plus the stimulus package, a separate bill to inject capitol in the economy. It was Summers' third meeting with Democratic senators in five days on the stimulus proposal, which includes tax measures and infrastructure spending that Obama wants to pass early this year.
Some skeptics of the stimulus recipe were in today's meeting and sounded more optimistic about what will actually be in the package when details are officially announced.
The two bills represent the main prongs of Obama's short-term economic plan, but they will require some salesmanship for both Republicans and Democrats frustrated after signing a $350 billion check for the unpopular TARP funds and jockeying for what should be included in the stimulus bill.
The more immediate concern is the TARP (Troubled Assets Relief Program) money. President Bush formally requested the second $350 billion authorized by that law Monday for use after Obama is inaugurated.
Congress has 15 days to vote on a measure that could deny Obama the TARP funds, but that resolution is subject to a presidential veto.
In order to keep the money from the president, both houses would have to override a veto. It is unclear whether that veto would come from Bush or Obama after next Tuesday. In either case, Senate Majority Leader Harry Reid, D-Nev., said today he is "very confident" there are the votes to defeat the resolution and release the $350 billion in TARP funds.
Reid said after the meeting with Obama he believed there would ultimately be enough senators to defeat any effort to block the second infusion of TARP money.
Democratic Doubts Over TARP
Democrats and Republicans have some of the same grumbles about the TARP money. They want more specifics from the incoming administration on how the money will be used.
Republicans, however, want to keep the money focused on the financial industry.
"We'd like to hear more from the new president and his team about just exactly how the $350 billion would be used," said Senate Minority Leader Mitch McConnell, R-Ky., who pointed out that the money was used to support banks and the auto industry, but never to buy the troubled assets it was originally meant to buy.
"We had a sense, based on the representations that were made at the time, that it was about saving the financial system," McConnell said. "The outgoing administration then ended up using it for an automobile bailout. And I think I'm safe in saying that that diminished significantly the enthusiasm among Republicans for the second tranche of the TARP."
At the Senate Budget Committee's confirmation hearing of Peter Orszag today, Sen. Bill Nelson, D-Fla., questioned Orszag about the second installment of TARP funds and the economic recovery plan, complaining that he hadn't been given details about either.
When Orszag deferred to Summers or Treasury secretary nominee Timothy Geithner for answers about those programs, Nelson said that wasn't good enough.
"It is my understanding that by Thursday, or maybe Friday, we're going to vote on whether or not to expend an additional $350 billion of TARP money," he said. "I think in this era of freshness and transparency that the new administration would want to come forth with detail(s) instead [of] this mumbo jumbo that's going on."
Three Democrats emerging from the meeting with Summers said they'd need more assurances from the incoming Obama administration about how that money would be spent, how it would be tracked and what conditions would be imposed on the institutions that take it.
"We need to have a better understanding and a better idea of how those dollars are going to be spent and where they're going to go. We haven't gotten a good idea in the past," said Sen. Blanche Lincoln, D-Ark.
"The letter was fine," she said of the message Summers sent to Congress Monday, laying out how the Obama administration would seek to keep track of the second $350 billion. "But there were no specifics in that letter."
Another concerned voice was that of Senate Finance Committee Chairman Sen. Max Baucus, D-Mont.
"Most senators are very concerned that the first 350 was spent unwisely and that if there is a second 350, it is spent more wisely," Baucus said. "I'm looking at the conditions. If the conditions are quite significant, then I'll support it. But I have to see the conditions."
After TARP, $700 Billion Plus for Stimulus
Oregon Sen. Ron Wyden, one of the few Democrats in the Senate to oppose the initial TARP legislation, said there is a tremendous amount of "voter angst" with regard to TARP. Many people, he said, view the bailout as an enormous "bait and switch."
He said the Bush administration did not follow through on assurances it made regarding oversight. But he dodged questions about whether assurances from the Obama administration would be sufficient to secure the money.
Those concerns will certainly affect the crafting of the stimulus package.
Many Democrats initially expressed skepticism with Obama's recipe for the stimulus package, saying it focuses too much on tax measures and not enough on direct investment by the government in aid to states and infrastructure spending on things like roads and bridges.
Several of the Democratic skeptics appeared satisfied that they have convinced Obama to drop the $3,000 tax credit he had planned for businesses that hire new employees. But dropping that provision will surely frustrate some Republicans who had voiced optimism about the stimulus plan last week.
"I'm not going to get into details, but all along, the view has been that nobody had a monopoly on good ideas in this legislation," Summers told reporters after his meeting with Democrats.
ABC News' Huma Khan, Dean Norland, Sunlen Miller and The Associated Press contributed to this report.