Obama demands stimulus action

US senators ramped up debate Tuesday on President Barack Obama's huge stimulus plan, now worth nearly 900 billion dollars, as Republican lawmakers insisted the package needed major changes.

Obama was to undertake a media blitz later Tuesday to sell the plan to the American public, conducting interviews with all five major US television news outlets -- ABC, CBS, NBC, CNN and Fox News.

The Democratic president expressed hope Monday that the Senate will give bipartisan backing to the bill, which although it passed the House of Representatives last week, it did so without a shred of Republican backing.

Obama admitted gaps remained between the parties on the measure.

"But what we can't do is let very modest differences get in the way of the overall package moving forward quickly," Obama told reporters in the Oval Office.

Senate Republican minority leader Mitch McConnell said major changes were needed, heralding possible clashes in the Senate debate as lawmakers attempt to amend the package, with a vote possible later this week.

"The package that most of my members would support would be dramatically different from what passed the House," McConnell told reporters, adding that it would be also "dramatically different" from the current Senate version.

"We need to make sure that we're not borrowing money to spend on projects that are not going to stimulate the economy," McConnell said, voicing Republican complaints the bill is partly a Democratic spending wish-list.

McConnell called on Democrats to strip a "Buy American" clause from the bill, designed to ensure only US steel, iron and manufactured goods are used on infrastructure projects designed to revive the economy.

"I don't think we ought to use a measure that is supposed to be timely, temporary, and targeted to set off trade wars when the entire world is experiencing a downturn in the economy," he said.

US allies including Canada and nations in Europe have warned of grave consequences if Washington adopted such "protectionist" measures.

The White House said Monday the clause was still under review.

The Senate version of the bill is now estimated at 888 billion dollars (692 billion euros) after new tax measures were added to the 819 billion dollar version passed by the House.

Republicans, some of whom are starting to speak in terms of a "trillion dollar" stimulus plan, complain the bill contains insufficient tax cuts that they argue are needed to stimulate public demand.

They also fault much of the vast infrastructure spending in the bill, support for social programs and funding for state initiatives, in the perennial inter-party debate over the size of the US government.

"There's too much spending, too much unnecessary spending, not the right kind of tax cuts and no endgame," former Republican presidential candidate, Senator John McCain, told CBS.

After their drubbing in last year's elections, Republicans are trying to rebuild their reputation as a party of fiscal responsibility and are using the stimulus to test the new president's leverage.

Obama is trying to cleanse Washington of partisan bile and would also like to build Republican goodwill for future big ticket agenda items.

Senate Republicans have the power to delay the bill but are not thought likely to be able to kill it, especially given the rapidly worsening economic conditions.

Texas Republican Senator Kay Bailey Hutchison warned on CNBC television that Democrats would "own" the package if they pushed it through Congress without Republican support and it didn't work.

"What we would like to do is try to amend the bill so that it would be something we will support," she said.

Democrats have shown some signs that they are prepared to accept Republican amendments extending tax credits for first-time home buyers designed to revive the plunging real estate market.

Obama spokesman Robert Gibbs said the White House would work to strengthen the bill, and the president later met Democratic congressional leaders at the White House to discuss tactics going forwards.

New government data Monday meanwhile showed consumption expenditures fell by 1.0 percent in December from the previous month.

The Commerce Department said private wage and salary disbursements decreased 23.5 billion dollars in December compared with a drop of 12.1 billion dollars in November.