FEBRUARY 1, 2009, 11:05 P.M. ET

Stimulus Package Set to Grow in Senate

By GREG HITT and BRODY MULLINS

WASHINGTON -- A push in the Senate to expand business-tax cuts and infrastructure spending in the economic-stimulus plan making its way through Congress poses a challenge for Democratic leaders, who want to keep the package's cost below $1 trillion.

Big fights loom this week as the Senate opens debate on its version of the stimulus, a package of tax cuts and spending with a price tag approaching $900 billion.

Republicans are preparing alternative proposals that would shift the emphasis away from spending. One proposal calls for cuts in the two lowest income-tax rates and strengthened aid to distressed homeowners, among other measures.

At the same time, a Democrat-backed amendment being readied would increase infrastructure spending in the bill by between $20 billion and $30 billion, boosting support for mass transit, highways and bridges, and wastewater-treatment plants, among other things. "We're going to see an increase," Sen. Charles Schumer (D., N.Y.) predicted on CBS News's "Face the Nation."

Republicans said they want to force a public debate on details of the plan, which they said was cobbled together in closed-door meetings of top Democrats and aides to President Barack Obama.

"I think the more people around the country see of it, the angrier they get, because it's very wasteful," Sen. Jon Kyl (R., Ariz.) said on "Fox News Sunday." "It spends way too much money."

Jim Manley, a spokesman for Senate Majority Leader Harry Reid (D., Nev.), said Republicans have been involved in drafting the legislation and will be able to offer amendments on the Senate floor this week.

Democratic leaders say the scope of the package must be large enough to address the needs of the U.S. economy, which has slid into recession, with slowing consumer demand, growing layoffs and declining home values. "We have to put enough water on this fire to put it out," said Illinois Sen. Dick Durbin, the Democratic whip, who also appeared on "Fox News Sunday."

Roughly two-thirds of the stimulus package involves spending measures, covering everything from jobless benefits and food assistance for the poor to investments in roads and bridges, intended to create jobs.

Democratic leaders in the House and Senate hope to hold the cost of the package below the $1 trillion level, not wanting to give Republicans any additional fodder to criticize the initiative, congressional aides said. The House passed its version of the package, costing $819 billion, last week.

But pressure is mounting among rank-and-file members of the Senate to add to the package.

Sen. Kent Conrad (D., N.D.) is pushing a proposal to widen the existing $7,500 tax credit for first-time home buyers to cover all purchases of primary residences.

A bipartisan push is under way to give multinational corporations a tax break on overseas earnings. Supporters contend the provision, which would allow corporations to bring overseas cash into the U.S. at reduced tax rates, would give firms an injection of capital at a time when cash-flow problems are widespread.

The Senate bill is silent on the issue. But Sens. Barbara Boxer (D., Calif.) and John Ensign (R., Nev.) have gotten behind the idea, which is supported by a coalition of technology and pharmaceutical companies led by the American Council for Capital Formation, a business-backed group.

"I hope and believe there is some momentum," said Mark Bloomfield, the group's president. "This is not a magic bullet, but it is a nice help, a nice kick, for stimulus."

Efforts to sweeten the legislation could drive away some potential supporters, such as Sen. Susan Collins (R., Maine). Speaking on CNN's "State of the Union With John King," she complained that the legislation is becoming "a Christmas tree where members are hanging their favorite program on it."

Write to Greg Hitt at greg.hitt@wsj.com and Brody Mullins at brody.mullins@wsj.com

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