Democrats scale back stimulus proposal

WASHINGTON – Congressional Democrats on Friday abandoned plans to offer a wide-ranging economic stimulus plan next week, putting off any chance that the federal government would provide a major jolt to the economy until after President-elect Barack Obama is sworn in Jan. 20.

Instead, Democrats have scaled back their proposal to a package that will include a $6 billion expansion of unemployment benefits and a $25 billion cash infusion for the struggling auto industry, setting up a confrontation with Senate Republicans over whether the government should expand its rescue program beyond the financial sector.

Senate Majority Leader Harry Reid, D-Nev., plans to offer that package Monday, the first day of what is slated to be a weeklong lame-duck session of Congress. A key vote could come Wednesday and if that fails, Democrats may have to settle for the 13-week extension of unemployment benefits as the only economic measure approved before they close until January.

In a letter to GOP leaders, Reid blamed Republicans and the White House for opposition to the larger plan, which was to include the unemployment benefits, auto industry help, aid to states and a large increase in infrastructure spending. The total package would have cost $61 billion to $150 billion.

“I understand that you currently oppose such a package and that Senate Republicans are prepared and able to block such legislation. This is disappointing and I hope you will reconsider,” Reid wrote to Senate Minority Leader Mitch McConnell, R-Ky.

McConnell, accusing Reid of publicly airing a private conversation, noted that Democrats still have not indicated how they intend to offer help to the auto industry.

“So it would be a real challenge to promise any level of support or opposition sight unseen,” McConnell said in a statement. “And while Sen. Reid’s public comments referenced our private conversation on the level of support for his yet unwritten bill, we don’t yet know if there is even sufficient support from within his own ranks.”

Democrats said they expect to craft a larger stimulus package in January and, aides said, hope to pass it in the earliest days of the Obama administration, when they will have much larger majorities at both ends of the Capitol.

As of Friday evening, Reid was considering methods of offering the money to the auto industry. In the House, Rep. Barney Frank, D-Mass., chairman of the Financial Services Committee, is drafting legislation that would carve out $25 billion from the $700 billion financial rescue plan Congress already has approved. The money would come in the form of “bridge loans” for day-to-day operations, which could help General Motors with the cash crisis that is driving it toward bankruptcy.

But the White House so far has balked at including the auto industry in the rescue program, officially known as the Troubled Asset Relief Program. Late Friday, White House officials instead endorsed reworking a separate federal loan guarantee program for the auto industry, which was signed into law in September and intended to help automakers retool their plants to build more fuel-efficient cars.