By Susan Cornwell and Richard Cowan
WASHINGTON (Reuters) - Democratic leaders in the U.S. Senate and House of Representatives worked on Thursday towards wrapping up passage of a $789 billion (555 billion pound) economic stimulus bill by week's end, as last-minute details were still being worked out.
"I do expect a vote tomorrow," House Majority leader Steny Hoyer told reporters.
The Senate meanwhile held out hope for a vote late on Thursday, but that schedule could slip into Saturday, according to leadership aides.
The bill's backers say the package -- a limited victory for Democratic President Barack Obama given robust Republican opposition -- will create and save 3.5 million jobs in an economy that has seen massive job losses and is mired in recession.
One congressional aide said the compromise bill, the focus of intense negotiations in recent days, still had some blanks to be filled in. Senate Assistant Majority Leader Richard Durbin said work was continuing on it.
Employment data released on Thursday showed the U.S. labour market remained on the ropes, highlighting the urgency of passing legislation. Although the number of workers filing new claims for unemployment benefits fell, it was by less than expected.
Obama, who has called for fast action on the stimulus to avoid economic "catastrophe," wants to sign it into law within days. But when he does, it will be without the backing of most Republicans, who just three weeks into his presidency, have ignored Obama's call for a more bipartisan spirit in Washington.
Most Republicans have urged bigger tax cuts as the salve for the economy and complained about government spending that they said would not boost the economy.
AN EMERGENCY STOPGAP
The stimulus bill is essentially a stopgap to prevent the economy, in recession since December 2007, from spiralling further downward. Separately, the Obama administration is trying to strengthen financial institutions that are at the centre of the economic morass.
While the bill would pump some quick funds into education and healthcare, it is a mere down payment on the sweeping changes Obama campaigned on before his November election win.
The non-partisan Congressional Budget Office said that "the macroeconomic impacts of any economic stimulus program are very uncertain." But the CBO, Congress' in-house budget analyst, said that "in the short run the stimulus legislation would raise GDP (Gross Domestic Product) and increase employment."
The package is split into 36 percent for tax cuts and 64 percent in spending and other provisions. Obama had called for a 40/60 split in his effort to jolt the economy.
Negotiators signed off on a compromise late Wednesday, after talks between a small group of negotiators in the House and Senate to reconcile bills passed separately by the two chambers.
'NOT THE SMART APPROACH'
Republicans criticized the huge cost of government projects in the bill at a time when the U.S. budget deficit is already projected to top $1 trillion this year.
"In my view, and in the view of my Republican colleagues, this is not the smart approach," Senate Minority Leader Mitch McConnell said.
But Durbin said that without the emergency spending, the situation would only get worse -- and the deficit with it -- as government revenues fell in a contracting economy.
Obama has spent the week selling the package to the U.S. public. He was flying to Peoria, Illinois on Thursday to visit a factory owned by heavy equipment maker Caterpillar Inc, which he has said would be able to rehire some laid-off workers once the stimulus is approved.
Under the compromise bill, negotiators agreed to narrow a tax credit for workers that would now total $400 for individuals and $800 for couples. An earlier version of the bill would have granted $500 and $1,000 respectively.
To help states facing growing budget shortfalls, the House had proposed $79 billion while the Senate had agreed to $39 billion. They compromised at $54 billion including some funds that could be used for modernizing schools.
Money for building new schools was stripped out and congressional negotiators also severely cut back tax incentives aimed at boosting flagging home and car sales that were deemed too expensive.
(Editing by Frances Kerry)
