US Congress approves Obama's $787 billion stimulus package

The U.S. package of government spending and tax cuts aimed at reviving the world's largest economy cleared both chambers of Congress in hopes of combating the worst economic crisis since the Great Depression, overcoming the resistance of Republicans who sought more tax breaks.

 

The Senate approved the measure 60-38 with three Republican moderates providing crucial support. Hours earlier, the House vote was 246-183, with all Republicans opposed to the package of tax cuts and federal spending that Obama has made the centerpiece of his plan for economic recovery.

 

The president could sign the bill as early as next week, less than a month after taking office. The new president had set a February 16 target date for the package -- a blend of tax cuts, aid to hard-hit Americans, and investment in infrastructure, education and energy that he says will save or create 3.5 million jobs.

 

But the victory was bittersweet, as lawmakers were voting on a compromise stimulus plan that was smaller than Obama had requested, and most Republicans rebuffed his appeals to join Democrats in approving the bill.

 

Republicans in both houses have been relentless critics, arguing the plan is filled with wasteful spending and that greater tax cuts would be more effective in creating jobs.

 

DETAILS OF PACKAGE

With the package, the president won money for two priorities of his administration - information technology in health care, and "green jobs" to make buildings more energy-efficient and reduce the nations reliance on foreign oil.

 

The legislation, a product of hard-fought negotiations this week, allocates 120 billion dollars to infrastructure spending, including monies for highways, trains and expanding broadband Internet access.

 

It also features nearly 20 billion dollars for renewable energy and 11 billion to modernize the US electrical grid -- steps former vice president Al Gore warmly endorsed weeks ago as a major down-payment on Obama’s strategy for fighting climate change.

 

The bill includes tax cuts -- expected to benefit 95 percent of US families -- and tens of billions of dollars for extending unemployment benefits, bolstering healthcare for the least well-off and funds to help cash-strapped states avoid cuts in services like education.

 

Final details included the drafting of precise language on trade. The House included a "Buy America" restriction forbidding the use of foreign steel and other products on infrastructure projects funded in the bill.

 

Negotiators were largely going with a Senate version that is much less restrictive, saying the US would abide by its international trade commitments.

  Â

Obama made the stimulus a cornerstone of his economic recovery plan even before he took office, but his calls for bipartisanship were an early casualty.

 

WALL STREET DOWN

Its approval failed to dispel pessimism on Wall Street, where persistent worries about the health of the banking sector this week have driven stock prices down by about 5 percent.

 

Markets were buoyed earlier by hopes that governments were coming up with measures to deal with the crisis and a plan President Barack Obama will announce on Wednesday to stem home foreclosures and stabilize the battered U.S. housing sector.

 

But a report by Britain's Lloyds Banking Group that its HBOS subsidiary lost 8.5 billion pounds ($12.28 billion) last year renewed fears about the financial system.

 

US stocks stumbled in volatile trading, closing 1 percent down. The Dow Jones Industrial Average ended the week 5.2 percent lower, its worst one-week performance since Nov. 20.

 

But shares of some big manufacturing companies gained on expectations they will benefit from the U.S. stimulus plan.

 

Investors remain jittery about U.S. Treasury Secretary Timothy Geithner's $1 trillion bank rescue plan and, lacking details, they wonder how it would relieve banks of money-losing assets at the root of the financial crisis that spread round the world.

 

The biggest American banks agreed on Wednesday to foreclosure moratoriums for at least a few weeks until the U.S. government launches an aid program for troubled homeowners using $50 billion included in Geithner's bank rescue package.

 

There is likely more pain to come. The U.S. economy will shrink a whopping 5.2 percent in the first quarter, its worst performance since 1982, according to a survey published by the Philadelphia Federal Reserve.