FAIRFAX (Virginia) - PRESIDENT-ELECT Barack Obama on Thursday promised that 95 per cent of working families would get a $1,000 (S$1,479) tax cut under his stimulus plan 'to get people spending again'.

This would be 'the first stage of a middle-class tax cut that I promised during the campaign and will include in our next budget', Mr Obama said in a speech outlining the broad lines of his plan to revive the US economy.

Democrats chafe at Obama's tax cut plans
Mr Obama's $300 billion (S$443.9 billion) tax cut plan hit trouble on Thursday among senators from his own Democratic Party who questioned whether it would ignite the US economy or quickly create jobs.

Top Obama aides launched an intense lobbying effort on Capitol Hill, as they attempt to drive an economic stimulus package set to cost at least 775 billion dollars (S$1.1 trillion) through Congress and into law by early February.

In first political skirmishes, senior Democrats questioned key planks of the plan, including the tax cuts, and urged Mr Obama to direct more investment to infrastructure and alternative energy projects.

Senate Budget Committee chairman Kent Conrad told reporters Democrats wanted the package to have as much 'bang for the buck' as possible, after a two hour meeting between party senators and Obama economic advisor Lawrence Summers and political guru David Axelrod.

He questioned the idea of giving individual taxpayers and couples a rebate of $500 to $1000 in a bid to inject immediate cash and buying power into the staggering US economy.

'These marginal incentives are of marginal effectiveness,' Mr Conrad said.

'When people are afraid they are going to lose their jobs, if they get another $20 a week they don't spend it, they save it.'

Mr Conrad said that members wanted to see more investment in energy conservation, the creaking US power grid and the development of new energy sources in the stimulus package.

Democrat John Kerry also suggested pouring a larger proportion of the stimulus package into alternative energy development which he said could help ease the US reliance on expensive foreign sources of power.

'I think that energy is the greatest opportunity we have in this economy,' Mr Kerry told reporters.

Republicans have welcomed the tax cut portion of the stimulus package, which could end up at 30 or 40 per cent of the total package.

Obama aides have dismissed the idea that the surprisingly large tax cut was inserted in the package to woo Republican votes with the president-elect hoping for overwhelming majorities for his stimulus plan.

Senators also questioned the efficacy of a $3,000 jobs credit for employers, saying that even if small business got a tax break, they would not likely take on extra workers if consumers were not buying their products.

While expressing disquiet about some aspects of the plan and giving few specifics of what was discussed with Obama aides, most senators were optimistic a package could be quickly agreed.

'There's an excellent change we'll work together with the president-elect so that, by (mid February) the president will have on his desk solid legislation,' said Mr Max Baucus, chairman of the Senate Finance committee.

Mr Axelrod told reporters that the meeting was the first step in a collaborative process, but that all senators understood the urgency of action.

'No one has a moment to delay,' he said. 'There is a sense of urgency that we share with the members here.'

Senate Majority leader Harry Reid said the Democratic caucus would meet again with top Obama aides on Sunday to discuss the package. -- AFP