Obama pushes for rest of bailout funds

updated 7:36 p.m. ET Jan. 13, 2009

WASHINGTON - Tested before taking power, President-elect Barack Obama appealed to Democrats in Congress on Tuesday to allow the use of an additional $350 billion in federal bailout funds and vowed to veto any move to block the money.

Obama backed up his plea with a promise to revise elements of the original bailout program that have drawn widespread criticism, pledging that billions will go toward helping homeowners facing foreclosure. Several Democrats said his commitments, to be made in writing, would be enough to prevent an embarrassing pre-inauguration drubbing for the president-elect when the Senate votes this week.

“This will be the first vote that President-elect Obama is asking us for. I’ll be shocked and I’ll be really disappointed if he doesn’t get it,” said Sen. Joseph Lieberman, an independent Democrat from Connecticut.

“This is a new beginning.”

Behind closed doors, Obama also urged lawmakers to act quickly on the massive economic stimulus measure that his aides have been negotiating with congressional officials. The legislation will blend federal spending with tax cuts, and could reach $1 trillion in size, a measure of the nation’s economic woes.

Democratic leaders in the House and Senate hope to have the legislation ready for his signature by mid-February, and House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid arranged a late-afternoon meeting to review progress.

For Obama, attendance at the Democrats’ weekly closed-door lunch was a homecoming of sorts, a return to the Capitol where he arrived as a newly elected senator only four years ago.

Sen. Carl Levin said the session had a sentimental tone at times, despite the magnitude of the nation’s economic woes and the challenge Obama and fellow Democrats confront.

“It’s kind of hard not to call him, ’Barack.’ So he said, ‘Call me Barack for the next couple of days,”’ Levin said with a smile

Despite its size, the economic stimulus bill is not expected to face heavy opposition among Democrats, and Obama has won praise from Republicans for showing a willingness to show deference to their concerns. Senate Republican leader Mitch McConnell, R-Ky., floated a new proposal, raising the possibility of a two-year elimination of Social Security payroll taxes.

Obama got a boost during the day from Federal Reserve Chairman Ben Bernanke, who said in a speech in London that the emerging legislation could provide a “significant boost” to the sinking economy.

Bernanke also warned in remarks prepared for the London School of Economics that a recovery wouldn’t last unless other steps were taken to stabilize the shaky financial system.

There was plenty of controversy surrounding Obama’s decision to tap the $350 billion remaining from the financial bailout program that Congress created last fall, when the nation’s credit markets ceased working and plunged an already weak economy into a tailspin.

President George W. Bush, acting at Obama’s request, formally notified Congress on Monday that Treasury wanted to use the funds, but Congress can vote to block the move.

“It is clear that the financial system, although improved from where it was in September, is still fragile,” the president-elect said Monday, making the case for use of the funds.

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