Holder hearing, bailout might spoil bipartisan start in '09

Senate Democrats are expected to start the 111th Congress with popular measures that could set a bipartisan tone -- and woo Republican allies -- but potential fights over bailout legislation and Attorney General nominee Eric Holder might short-circuit those warm feelings.

Senate Majority Leader Harry Reid, D-Nev., has touted plans to pass a stimulus package in time for President-elect Barack Obama to sign when he takes office.

Aides also expect the Senate to move fast on most of Obama's Cabinet nominations and on legislation to reauthorize the State Children's Health Insurance Program, expand stem-cell research and fund health information technology.

The low-hanging fruit could give the chamber a quick set of accomplishments and help establish a legislative coalition. Also, an early agenda that is heavy on health issues could serve as a test run for the upcoming push to overhaul the healthcare system.

Senate Minority Leader Mitch McConnell, R-Ky., will start next year preparing for his role, once President Bush exits, as the last defense against an ambitious Democratic agenda opposed by the GOP base. But Republicans must balance that role with a desire to avoid an obstructionist label, and will likely try to limit fights early, Republican aides said. Staffers said Republican cooperation might depend in part on whether Reid, after often limiting senators' ability to offer amendments in the 110th Congress, relents. Judiciary Committee Chairman Patrick Leahy, D-Vt., initially set a Jan. 8 hearing on Holder's nomination, over objections by Judiciary ranking member Arlen Specter, R-Pa., who wanted more time to study Holder's record. Monday, Leahy pushed back the hearing to Jan. 15 and said Specter agreed to the move. Republicans have said they will grill Holder about his role in President Bill Clinton's 2001 pardons and even Holder's 2004 job offer from Illinois Gov. Rod Blagojevich.

In the House, Majority Leader Steny Hoyer, D-Md., has said the Democratic leadership will focus on finishing the business of the 110th Congress. But Democratic leadership sources said fiscal 2009 appropriations matters that must be rectified before the continuing resolution expires March 6 might not be addressed right away. Instead, the House will focus on the economic stimulus package -- including possible tax cuts aimed at middle-income earners and small businesses as advocated by Obama -- and the SCHIP measure. Long-stalled renewable portfolio standard legislation could also be on the House agenda right away, and both chambers are likely to have to deal at some point with rescue plans for the automobile industry. Senior sources on and off Capitol Hill said they expect the Bush administration to do the minimum needed to ensure that that automakers do not go into bankruptcy in the near term. "The goal is to just avoid a bankruptcy on this administration's watch," said one top financial services industry lobbyist. "Then it will fall in Obama's lap."

Anna Edney and Humberto Sanchez contributed to this report.