WASHINGTON — Senate Republicans circulated a sweeping plan to drive down the cost of mortgages by expanding the federal government’s role in the industry, officials said Monday night as debate opened on an economic stimulus bill at the top of President Barack Obama’s agenda.
The emerging proposal also relies on a bigger and more widely available tax break for homebuyers than is now available, those officials added as Senate Republicans staked their claim to a different type of economic recovery measure than Democrats and the administration favor.
Democrats already are under pressure from moderates in their own party to scale back spending in the $885 billion bill, and Obama met with party leaders at the White House late in the day to discuss strategy.
“What we can’t do is let very modest differences get in the way” of swift enactment of the legislation, Obama said several hours earlier as new layoffs rippled through the economy and the Commerce Department reported an unexpectedly large sixth straight drop in personal spending.
In the Capitol, Republicans said their goal was to change the bill, not to block it. “Nobody that I know of is trying to keep a package from passing,” said Sen. Mitch McConnell of Kentucky, the Republican leader.
“We need to fix housing first,” he said. Republicans are expected to seek a vote on their proposals this week as part of the debate on the overall stimulus measure.
Officials said the GOP was coalescing behind a proposal designed to give banks an incentive to make loans at rates currently estimated at 4 percent to 4.5 percent. Fannie Mae and Freddie Mac, which were seized by the federal government in September, would be required to purchase the mortgages once banks have made them to consumers.
Officials said loans to credit- worthy borrowers on primary residences with a mortgage of up to $625,000 would qualify, including those seeking to refinance their current loans.
Separately, Republican officials said they intended to press for a $15,000 tax credit for homebuyers through the end of the year. Current law permits a $7,500 tax break and limits it to first-time homebuyers.
Republicans generally dislike government intervention in the workings of the private marketplace, but their opposition has eroded in recent months as the crisis in the financial industry and economy have deepened.
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