Trillions aimed at financial recovery
WASHINGTON -- The White House unveiled a sweeping proposal Tuesday to spend as much as $2 trillion in public and private funds to prop up the nation's financial system as the Senate narrowly approved an $838 billion stimulus intended to jump-start the failing economy.
Even as President Obama and Congress worked to wrestle their way out of the worst economic crisis since the Great Depression, stock prices plunged on Wall Street. Major indexes skidded by more than 4%, and the Dow Jones industrial average fell 382 points.
"It's gotten worse," Obama said in Fort Myers, Fla., the latest stop on a tour around the nation the president hopes will build support for the stimulus. "The situation we face could not be more serious."
After more than a week of debate, three Republicans joined all the Democrats and two independents in the Senate to approve the stimulus 61-37. Congressional leaders must resolve the differences in competing bills passed by the House and Senate while retaining its fragile support.
Senate Minority Leader Mitch McConnell, R-Ky., has said for weeks that the stimulus plan is too costly and has questioned whether it will produce or save the 4 million jobs Obama has promised. He called the combined level of spending in Obama's proposals unprecedented.
"This paints a picture of the Europeanization of America," McConnell said. "I do think it's important to focus on the larger question of, 'Where are we going to leave the country in two years if we take all of these steps?' "
Obama and House Majority Leader Steny Hoyer, D-Md., have said they would like to restore some spending cuts made by the Senate, specifically money for school construction. But senators, noting that the bill barely received the 60 votes it needs to overcome a Republican filibuster, warned against many changes.
Senate Democratic leaders said they hope Congress can take a final vote by week's end.
"It ought not to be modified in any significant ways," said Sen. Ben Nelson, D-Neb., who helped trim about $100 billion from the stimulus package in an effort to attract Republican support. "You can slice and dice this a lot of different ways, but when you start doing that you change the balance."
In an indication of just how delicate negotiations over the two versions of the bill may become, Senate Majority Leader Harry Reid, D-Nev., took the unusual step of appointing himself to the joint House-Senate committee charged with striking a compromise. The Obama administration plans to take a leading role in the effort.
Reid said he met with Obama and House Speaker Nancy Pelosi, D-Calif., on Tuesday. The president also met with a group of 45 conservative House Democrats who are concerned about the effect the measure will have on the nation's deficit.
Obama also will continue his high-profile public tour to keep pressure on Congress. He is scheduled to visit a road construction site in Springfield, Va., on Wednesday, and a Caterpillar plant in Peoria, Ill., on Thursday.
As Congress moved toward a final stimulus vote, Treasury Secretary Timothy Geithner unveiled the banking plan, which envisions the government partnering with private investors to help banks free up credit — for credit cards, mortgages, student and auto loans — in return for tougher safeguards.
Markets appeared let down that the proposal did not include more specifics, particularly on the question of how to price mortgage-backed securities that have plummeted in value. Geithner said more specifics would be released in coming weeks.
Asked about the market's reaction, Obama told ABC's Nightline: "Wall Street, I think, is hoping for an easy out on this thing and there is no easy out."
Contributing: Sue Kirchhoff and David Jackson