House passes Obama's $825bn stimulus package

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FIRST GAINS: Stimulus package was passed by the sharply divided House on a 244-188 vote. (Getty Images)

President Barack Obama scored his first major legislative victory on Wednesday with passage of an $825 billion economic stimulus package by a sharply divided US House of Representatives on a 244-188 vote.

Obama, who took office eight days ago , was denied, at least for now, his goal of bipartisanship. Every Republican who voted opposed the landmark bill, complaining it contained too much new spending and not enough tax cuts.

All but 11 of Obama's fellow Democrats in the House supported the bill to combat the worst economic crisis since the Great Depression. The Senate begins debate next week.

Obama, seeking to build support, said, "I hope that we can continue to strengthen this plan before it gets to my desk" to be signed into law.

"But what we can't do is drag our feet or allow the same partisan differences to get in our way," Obama added in a statement issued by the White House. "We must move swiftly and boldly to put Americans back to work, and that is exactly what this plan begins to do."

House Speaker Nancy Pelosi, a California Democrat, said Obama sought bold and swift action and "that is exactly what action we are taking today."

On his first visit to the Capitol as president on Tuesday, Obama failed to ease Republican concerns the package included too little in tax cuts, $275 billion, and too much in spending, $550 billion.

They at least agreed to keep talking to each other.

The Democratic-led Senate is expected to approve a similar version of the bill, one costing $887 billion. It includes a one-year fix to insulate middle-class taxpayers from the Alternative Minimum Tax, which originally was aimed at the wealthy but is affecting a growing number of middle-class taxpayers because of inflation.

Once the Senate passes its bill, House and Senate negotiators must resolve differences and approve a final measure that can be sent to Obama.

During a daylong debate, House Democrats rejected Republican efforts to strip out the new spending - which includes money to rebuild crumbling roads and bridges and upgrade healthcare and schools - and instead approve a package essentially restricted to about $478 billion in tax cuts.

House Republican leader John Boehner said his party's approach would create an estimated 6.2 million jobs.

"That's twice as many as the (Democratic) bill that is on the (House) floor now for about half the price," Boehner told reporters.

Earlier in the day at the White House, Obama got a boost from corporate heads.

"The message has to be that the situation is dire," David Cote, chief executive of Honeywell, said after a meeting with Obama and other business leaders. "Everybody is being touched by this."

Ending the 13-month US recession will be difficult and economists disagree over how to do it.

In a full-page ad in Wednesday's New York Times, a group of economists said they "do not believe that more government spending is a way to improve economic performance." The ad was paid for by the Cato Institute, which supports policies to limit government.

On Friday, the federal government is due to release an estimate of economic performance that economists expect will show the economy contracted at an annual rate of 5.4 percent last year. That would put the US economy closer to the 6.4 percent contraction in 1931, which was followed by 13 percent in 1932, during the Great Depression.

The House-passed bill would spend $825 billion over the next few years with a combination of emergency spending and tax cuts to create and save up to four million jobs.

"This $825 billion package is not too large ... in fact it's probably smaller than it ought to be", House Appropriations Committee Chairman David Obey said.

US stocks rose on Wednesday on optimism the new administration was moving quickly to stabilize banking and on hopes for a stimulus package soon. (Reuters)

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