By Richard Cowan
WASHINGTON (Reuters) - Republicans in the Senate accepted on Thursday President Barack Obama's offer to search for a compromise on an economic stimulus bill that could end up costing around $900 billion, as long as tax cuts play a large role.
The Senate is expected to start considering the massive bill next week, following passage on Wednesday in the House of Representatives of a slightly smaller bill, without the support of a single Republican.
Vice President Joe Biden, in a possible bow to Republicans, said there could be changes in some of the bill's spending and tax provisions once House and Senate negotiators meet to work out a compromise bill next month.
"We look forward to offering amendments to improve this critical legislation," Senate Republican Leader Mitch McConnell said.
Congress is rushing to meet a mid-February deadline set by Obama for enacting the legislation.
The nonpartisan Congressional Budget Office laid out a series of steps Congress could take to get economic stimulus money into the pipeline quicker. Republicans have criticized the Democratic legislation by saying a large chunk of the money would not be spent until after 2010, which could slow some needed job-creation.
But CBO warned there were pitfalls in spending faster, including possible contracting errors and "undertaking projects that are of little value but that can be started up quickly."
Despite talk of the two parties working together, tensions were obvious.
Some Republican ideas already were incorporated into the legislation, said House Speaker Nancy Pelosi, a Democrat. As for other Republican initiatives, "They just didn't have the ... support of a majority of the people in the Congress."
Senate Democratic Leader Harry Reid said he was "confident that we are going to get Republican support on the bill," but added that Republicans could "sit back and nitpick" the legislation. If there is not a bipartisan vote, "it's not our fault," he said.
One top Senate Republican left the door open to slowing down the bill next week.
"Whatever we can do -- whether that is offer an amendment, whether it's voting against the bill because it could not be amended, whatever parliamentary opportunities are available to us, we will explore," said Senator Jon Kyl of Arizona, the number-two Republican.
The House bill was touted as costing $825 billion, but might be closer to $819 billion when accounting for its future impact on the deficit. The Senate bill, with different tax components, would come close to $900 billion.
Obama says he wants to work with Republicans as he not only pushes the stimulus package but looks ahead to other major initiatives, such as expanding health care, stemming global warming and revamping the financially troubled Social Security retirement program.
MORE TAX CUTS
McConnell said a main goal for the Senate Republicans will be to increase the amount of tax cuts in the package so they amount to 40 percent of the overall measure, with the rest in emergency spending.
The House-passed bill is closer to 33 percent being devoted to tax cuts -- not hugely different from McConnell's goal.
The Senate Republican leader's formula contrasted with what many House Republicans sought: only tax cuts and no new spending at all to jump-start an economy that has been in a recession for more than a year.
The Senate will begin its debate with fresh statistics that likely will underscore the dire shape of the U.S. economy.
On Friday, the government will issue its latest estimate of U.S. gross domestic product. Many economists think it will show that the economy suffered a 5.4 percent contraction last year, which would be the worst performance since 1982.
Data released on Thursday showed the number of U.S. jobless claiming benefits jumped to a record in mid-January, and new orders for durable goods fell for a fifth straight month in December, while sales of newly built single-family homes slumped to their lowest levels since records started in 1963.
U.S. stocks fell on Thursday following other bleak economic news, including rising unemployment figures and a continued decline in orders for manufactured goods and new home sales.
Beyond calling for more tax cuts, McConnell said a jobs-creating economic stimulus bill should be devoid of questionable spending. "Are these projects necessary? Will they stimulate the economy? Will they create jobs?" he asked.
(Additional reporting by Jeremy Pelofsky, Susan Cornwell, Tabassum Zakaria and Thomas Ferraro, editing by Patricia Zengerle and David Wiessler)
