Watch CBSN Live

Obama Warns Critics Of "Catastrophe"

President Barack Obama says the recession will turn into a "catastrophe" if Congress doesn't pass an economic stimulus package quickly.

"A failure to act, and act now, will turn crisis into a catastrophe and guarantee a longer recession, a less robust recovery, and a more uncertain future," the president said Wednesday as he unveiled plans to limit compensation to $500,000 for executives whose companies receive "extraordinary" assistance from the government.

Mr. Obama rejected several criticisms of the plan: that tax cuts alone will solve the problem, or that longer-term goals such as energy independence and health care reform are not also critical to address at the same time.

Mr. Obama subtly referenced his win in November while arguing that recalcitrant lawmakers need to get behind his approach.

"Let's not make the perfect the enemy of the essential," the president said.

The cost of Mr. Obama's economic recovery plan is now above $900 billion after the Senate added money for medical research and tax breaks for car purchases.

It could go higher Wednesday if a tax break for homebuyers is made more generous, even as centrists in both parties promise to clear away spending items that won't jump-start the economy right away.

According to the Washington Post, Senate Democrats lack the 60 votes needed to both pass the plan and avoid a Republican filibuster.

In an interview on CNN, Mr. Obama signaled a willingness to drop items that "may not really stimulate the economy right now." He also signaled he'll try to remove "buy American" provisions in the legislation to avoid a possible trade war.

The actual details of the stimulus package often get lost in all the coverage of the back-and-forth between lawmakers. For a glance at what's actually being planned, see's Political Hotsheet, where we've published the Associated Press' breakdown of the highlights of what's in the package.

In a victory for auto manufacturers and dealers, Sen. Barbara Mikulski, D-Md., won a 71-26 vote to allow most car buyers to claim an income tax deduction for sales taxes paid on new autos and interest payments on car loans. The break would cost $11 billion over the coming decade but could mean savings of $1,500 on a $25,000 car.

"Just as we need to get the housing market going, we need to get auto sales going," said Sen. Debbie Stabenow, D-Mich.

Wednesday's session could produce even more generous savings for homebuyers.

Sen. Johnny Isakson, R-Ga., is pressing for a tax credit of up to $15,000 for everyone who buys a home this year, at a cost of $18.5 billion. The pending measure would award a $7,500 tax credit only to first-time homebuyers.

At the same time, centrist senators, including Ben Nelson, D-Neb., and Susan Collins, R-Maine, are seeking to cut tens of billions of dollars from the legislation. They're operating with the blessing of Democratic leaders, who hope a successful effort could attract some GOP votes for Mr. Obama's plan.

Click here for a comparison of the House and Senate versions of the package.
Democratic leaders conceded they may soon be obliged to cut billions of dollars from the measure. "It goes without saying if it's going to pass in the Senate, it has to be bipartisan," said Sen. Dick Durbin of Illinois, the second-ranking Democratic leader, adding that rank-and-file lawmakers in both parties want to reduce the cost of the bill.

President Obama, speaking to CBS Evening News anchor Katie Couric Tuesday, acknowledged that some of the fat added to the stimulus package in the House would likely have to be trimmed.

"Many of the projects that people have pointed out as partisan pet projects are actually pretty good policy. They may just not belong in this bill," Mr. Obama said in the interview, which aired Tuesday night.

CBS News correspondent Sharyl Attkisson reports that more than half of Americans surveyed say Congress should make big changes to the stimulus package or reject it altogether, and Republicans have sensed a chink in the new president's armor. (Click here to read more.)

"I'm sure that Democrats, or at least the president, is embarrassed by some of this," said Sen. Jon Kyl, R-Ariz.

In a series of skirmishes Tuesday, the Senate turned back a proposal to add $25 billion for public works projects and voted to remove a $246 million tax break for movie producers. Both moves were engineered by Republicans who are critical of the bill's size and voice skepticism of its ability to create jobs.

But several hours later, GOP conservatives didn't contest approval of a $6.5 billion increase in research funding for the politically popular National Institutes of Health. That amendment, by Tom Harkin, D-Iowa, drove the price tag of Mr. Obama's plan just above $900 billion.

Democratic leaders have pledged to have the bill ready for Mr. Obama's signature by mid-month.

View CBS News In