Jan. 29 (Bloomberg) -- Lawmakers remain divided over whether President Barack Obama’s fiscal stimulus would do enough to pull the economy out of recession as an $819 billion package passed by the House with no Republican votes heads to the Senate.

Republicans will have more power to demand changes in the Senate, where they are calling for more tax cuts, less spending and a bigger focus on housing. The House passed its plan yesterday 244-188.

“I am confident we are going to get Republican support on our bill,” Senate Majority Leader Harry Reid told reporters today.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, said the House plan “doesn’t meet the standard for bipartisan cooperation set by President Obama.” He said it “doesn’t fix the main problem, which is housing,” and that his colleagues want to make changes “which will actually stimulate the economy.”

The stimulus package, equivalent to one-quarter of the federal budget, is aimed at resuscitating an economy that lost 2.6 million jobs last year. The House plan would provide a $500 payroll tax cut for individuals, plus $604 billion for infrastructure projects, jobless benefits, education programs, aid to state governments and scores of other initiatives.

The House plan was panned today by Harvard University economist Martin Feldstein, a former Reagan administration official who has advised Senate Democrats on crafting their plan. Writing in the Washington Post, Feldstein said the House proposal is an “$800 billion mistake” that needs to be “thoroughly revised” even if it means delaying enactment for a month or two.

‘Delivers Too Little’

“The problem with the current stimulus plan is not that it is too big but that it delivers too little,” Feldstein wrote.

Obama yesterday urged lawmakers to work out their differences in the next few weeks, saying delay in passing a final bill would cost more people their jobs. The Senate is likely to begin work on the stimulus plan on Feb. 2.

The Senate version of the stimulus bill already differs from the House plan. The Senate Finance Committee voted this week to add a $70 billion alternative-minimum tax cut to the package. Lawmakers in the two chambers also differ over how much to spend on highway projects, renewable-energy tax breaks and expanding access to broadband.

McConnell said Senate Republicans want to attach provisions designed to fight the housing crisis by having the federal government insure 4 percent fixed-rate mortgages.

“We realize we have to make some compromises; we believe we have,” said Democratic Senator Chuck Schumer of New York, pointing to the AMT language added at Republicans’ request. Obama had opposed including it in the stimulus.

Visit to Capitol

Obama traveled to Capitol Hill earlier this week to personally lobby for Republican support, an effort that included a private session with the party’s House members. He failed to win any converts. In yesterday’s vote, all of the 244 “yes” votes came from Democrats. Voting “no” were 177 Republicans and 11 Democrats.

The president hosted a cocktail party for Democratic and Republican congressional leaders at the Blue Room in the White House last night after the vote. House Minority Leader John Boehner, an Ohio Republican, told Obama he shouldn’t take the House vote as a rebuke to his outreach effort, according to a Democratic aide with knowledge of the conversation. The aide spoke on condition of anonymity.

House Speaker Nancy Pelosi, a California Democrat, today defended her chamber’s plan and rejected House Republicans’ complaints that they were excluded from drafting the legislation. “We reached out to the Republicans all along the way, and they know it,” she said.

‘Step One’

Pelosi said the House bill was only “step one in the process” of working out a plan. “We look forward to seeing what the Senate does,” the speaker said.

Senate Finance Committee Chairman Max Baucus of Montana has signaled willingness to work with Kentucky Senator Jim Bunning to consider additional tax relief, including an increase in deductions for investment losses.

The nonpartisan Congressional Budget Office estimated this week that by the end of 2010, the House bill would pump into the economy about $526 billion, slightly less than two-thirds of the package. The agency said the plan would provide a “substantial” boost to the economy, estimating it will create between 1.2 million and 3.6 million jobs.

Feldstein’s column said Obama’s proposed payroll tax cut would do little to boost consumer spending. He said the plan is “full of well-intended” spending items such as computerizing health-care records that are unlikely to create many jobs.

Refundable Tax Credits

Feldstein proposed offering refundable tax credits that would help families make major purchases, as well as a bigger focus on replacing military equipment lost in the Iraq war.

Senator Richard Durbin of Illinois, the second-ranking Democrat in the chamber, said he hadn’t seen Feldstein’s column, though he added, “When he spoke to us last week he was very positive on the stimulus package, and very positive on infrastructure spending as a major element in helping to turn this economy around.”

“Economists tell us the bottom line is that it’s better to overspend in the hopes that this will be enough water to put out the fire than to underspend and throw a teacup of water only to return a couple of days later” to put it out, Durbin said.

The House measure would expand tax credits for the working poor, make more families eligible for a child tax credit and expand college tuition subsidies. It would let businesses convert losses into tax refunds and provide faster write-offs for purchasing equipment.

The plan would expand unemployment benefits on several fronts. It would increase average weekly payments by $25 while offering states incentives to provide coverage to part-time workers. It would also expand a program that allows the jobless to continue buying health-care coverage through their former employers by subsidizing their insurance and letting older workers receive benefits longer.

The bill is H.R. 1.

To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net

Last Updated: January 29, 2009 14:29 EST