Jan. 8 (Bloomberg) -- President-elect Barack Obama’s economic stimulus package ran into turbulence in the U.S. Senate, where members of his own party criticized elements of the plan as ineffective.

Lawmakers, who met today with Obama advisers, took aim at a plan to withhold less from workers’ paychecks, tax incentives for businesses to hire new workers, and the share of the plan dedicated to tax cuts. Others said Obama’s plan wouldn’t do enough to reduce the nation’s dependence on foreign oil while others called for more infrastructure spending.

Several lawmakers criticized a $140 billion proposal to give $500 to individuals and $1,000 to families by withholding less from their paychecks, saying it would do little to boost the economy. Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, compared the idea with rebate checks sent last year by the Treasury Department, which he said were “largely a bust” in terms of boosting consumer demand.

“I’m very skeptical that’s going to make a difference,” Conrad told reporters in Washington. “For the average family, it’s going to add $20 a week -- I mean, how much lift is that going to give?”

The remarks came as Obama gave a speech in Fairfax, Virginia, warning of dire consequences if Congress doesn’t approve the plan soon.

Not ‘Too Late’

“I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible,” Obama said. “If nothing is done, this recession could linger for years.”

The debate was overshadowed by a Congressional Budget Office report yesterday that predicted the federal deficit will more than double this year to at least $1.18 trillion, the biggest since World War II. Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said his panel tentatively plans to consider stimulus legislation on Jan. 22. Senate Democrats met behind closed doors for about two hours today with Obama advisers Larry Summers, Jason Furman and David Axelrod.

Axelrod said after the meeting that “there is a good-faith desire to work together to come to a constructive conclusion very quickly.” He said, “we understand what people’s concerns are.” Summers declined to comment after the meeting other than to say they had a “good discussion.”

Typical of Negotiations

Senator Charles Schumer, a New York Democrat, said he was “optimistic” lawmakers could complete work on the plan by Feb. 13 and characterized the exchange as typical of negotiations between lawmakers and the executive branch.

“This is how the process works,” Schumer said. “The president-elect sends us the larger package” and “then individual senators seek to change a little bit here or add something there.”

Schumer said he is pushing for an increase in college- tuition deductibility, which he said has a “good chance” of being included. He defended the tax-withholding plan criticized by several lawmakers, saying workers are more likely to spend a series of smaller pay increases than if they receive the same amount of money in a single rebate check.

“I have a lot of faith in the economic advisers of Barack Obama,” Schumer said. “They know what they’re doing.”

Employer Tax Break

Several lawmakers criticized plans to offer businesses a $3,000 tax credit to hire new workers.

“Why would you, if you got a couple thousand dollar jobs credit, go out and hire somebody to build a car nobody’s buying?” said Conrad.

“I’d rather spend the money on the infrastructure, on direct investment, on energy conversion” and other things that may create jobs more quickly, said Senator John Kerry, a Massachusetts Democrat.

Others called for adding more energy tax incentives.

“I think there would be bipartisan support for retooling the package to skew it more towards energy,” said Senator Ron Wyden, an Oregon Democrat. “There is more interest in energy investment and the opportunity to create jobs in energy than I think the Obama people have picked up on.”

Senate Agriculture Committee Chairman Tom Harkin, an Iowa Democrat, suggested the Obama plan had too many tax cuts.

“To me it still looks like more of this trickle-down,” Harkin said after the meeting. “If someone gives you a tax break you’re going to save that money, you’re going to salt that away - - you’re not going to be spending it.”

Senate Majority Leader Harry Reid, a Nevada Democrat, called the stimulus plan “a work in progress” and said, “there’s nothing that’s written in stone.”

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

Last Updated: January 8, 2009 19:11 EST