Obama to put economic case to the nation

US president Barack Obama will take his case to the nation tonight as his struggle to steer through an economic recovery package is proving to be a difficult test of his leadership.

Mr Obama will give his first prime-time news conference at 8pm local time (1am on Tuesday Irish time).

He will also participate in town hall-style meetings in cities suffering particularly hard times - Elkhart, Indiana, today and Fort Myers, Florida, tomorrow.

As well as struggling to get a divided Congress to agree on his economic stimulus package, Mr Obama is pitching a new plan to ease loans to US consumers and businesses.

The Senate's US$827 (€641bn) stimulus legislation seems assured of narrow passage by tomorrow, but the harder work for Mr Obama and the Democrats comes in the days ahead, when the House of Representatives and Senate attempt to reconcile differences in their two versions.

Mr Obama and Democratic Party leaders had hoped to have a bill ready for the president's signature by February 16 - a deadline that grows more challenging by the day.

At the Treasury Department, secretary Timothy Geithner delayed the unveiling of a new bailout framework for financial institutions from today to tomorrow to let the administration focus on the Senate legislation.

Mr Geithner is considering steps to broaden the use of a new lending facility at the Federal Reserve, provide government guarantees to help banks deal with their troubled assets and continue direct infusion of capital into banks in exchange for securities and tougher accountability rules.

For Mr Obama, the economy has become a two-front engagement, with one effort aimed at creating or saving jobs and the other at thawing the credit markets.

Amid the urgency created by nearly 600,000 new unemployed workers last month and new bank failures, his economic prescriptions are coming under critical scrutiny by both Congress and the American public.

The House and Senate bills are about £4.8bn (€5.4bn) apart in cost and overlap in numerous ways. But the Senate bill has a greater emphasis on tax cuts, while the House bill devotes more money to states, local governments and schools.

Lawrence Summers, Mr Obama's top economic adviser, signalled the struggle ahead as he made the rounds of Sunday-morning talk shows.

"There are crucial areas, support for higher education, that are things that are in the House bill that are very, very important to the president," he said.

Rep Barney Frank, the Democratic chairman of the House Financial Services Committee, warned that reductions in state spending in the Senate bill would mean cuts in public services such as the police and fire brigade.

But Senator John Ensign, a member of the Senate Republican leadership, dismissed Mr Frank's comments as "fear-mongering".

The Senate bill is finely tuned. With only two or three Republicans on board, it is guaranteed, at most, 61 votes; the bill needs 60 votes in the 100-member body to advance and avoid procedural hurdles. Any change in the balance struck by the Senate bill could kill it.

Senator John McCain, a strong critic of the stimulus bill, complained that Republicans would not be involved in the final negotiations.

"That's the way the Bush administration, when we Republicans were in charge - that's the way we did business," he said. "But I thought we were going to have change."

The bank bailout proposal that Mr Geithner will announce tomorrow also carries policy and political risks. Congress approved a $700bn (€5.42bn) bailout for the financial sector last year. But since then, both parties have been critical of how the Bush administration spent the first half of the money.

The Senate grudgingly agreed to give Mr Obama access to the second half of the fund, but only after he promised to impose tougher conditions and to devote at least $50bn (€38.7bn) of the fund to reducing home reposessions.

Officials said Mr Geithner would not ask for more money at this point. Instead, his plan is likely to include various approaches to loosening credit and helping banks deal with troubled, mortgage-backed assets.