The report by Legislative Analyst Elizabeth Hill shifted the state's fledgling budget debate to whether new taxes should be part of the solution — an approach the Republican governor has opposed.

It also sparked the kind of partisan sniping that Democrats and Republicans had so far avoided in hopes of preventing a repeat of the protracted budget debate that paralyzed the capital last summer.

Schwarzenegger last month pegged the shortfall at $14.5 billion through June 2009, but Hill said it has grown to $16 billion. She said Schwarzenegger's proposal for the 2008-09 budget year was flawed because it fails to set funding priorities or correct the state's chronic imbalance between spending and revenue.

"A decline in revenue means we have a larger shortfall than the governor projected," she said. "Our recommendations will affect all Californians in some way. However, we think that will benefit all Californians in the long run."

Democrat Barack Obama looked to continue his winning streak in three mid-Atlantic presidential primaries and brushed aside questions Tuesday about future contests to which rival Hillary Rodham Clinton has turned her attention. Republican John McCain sought to rebound from two weekend losses to Mike Huckabee and reinforce his position as the inevitable GOP nominee.

"It's very early," Obama said when asked about his prospects in the March 4 Texas primary during an appearance near a polling place here. "We haven't even gotten through this yet, come on, man," he added, referring to Tuesday's Democratic presidential primaries in Virginia, Maryland and the District of Columbia. Clinton planned to spend election night at a rally in El Paso, Texas.

Obama surprised customers at a Dunkin' Donuts shop across from a school with a polling place. Autographs-seekers jostled with reporters, cameras and Secret Service agents as Obama worked his way through the crowd with Washington Mayor Adrian Fenty to deliver donuts and coffee to his poll workers.

Coming off weekend victories in five contests, Obama was favored to win the mid-Atlantic primaries which draw a heavy blend of black and better educated voters, blocs that have aided his wins in earlier matchups against Clinton. Likewise, McCain was favored on the GOP side.

Democrats picked 168 delegates and Republicans 116 on Tuesday.

"We need something new," Obama told a huge rally at the University of Maryland on Monday, dismissing the former first lady's suggestions that he is not tough enough for the rigors of the presidency.

The Illinois senator was traveling late Tuesday to Wisconsin, which votes next week, along with Hawaii, where Obama grew up.

With the Clinton campaign all but conceding losses Tuesday, as well as in other primaries during the month, the New York senator prepared to fly to Texas, which holds its primary on March 4. She is banking on strong showings there and in Ohio, which votes the same day, to blunt Obama's momentum.

"I wouldn't be doing this if I didn't think I would be the best candidate," Clinton told reporters Monday as she campaigned near Baltimore. "So I'm going forward — every day, we get to make our case to the American people."

Bush has hailed the package amid a worsening housing market downturn and a dramatic slowdown in American economic growth.

The stressed economy lost jobs last month for the first time in over four years and a Wall Street credit crunch, triggered in part by rising home foreclosures, has roiled global financial markets in recent months.

"This plan is robust, broad-based, timely, and it will be effective. This bill will help to stimulate consumer spending and accelerate needed business investment," Bush said in a statement released Thursday by the White House.

The plan is valued at around 150 billion dollars and crammed with temporary tax rebates and business incentives.

Tens of millions of Americans are likely to receive tax rebate checks in their mailboxes in coming months after Bush gives the stimulus his official blessing.

Treasury Secretary Henry Paulson also welcomed congressional approval of the package, saying it would inject money into a stressed economy.

"This package of payments to individuals and incentives for businesses to invest will support our economy as we weather the housing downturn," the Treasury secretary said.

Democratic and Republican senators had sparred over different incentives after the House of Representatives passed an initial version of the plan last Tuesday.

The Democratic-controlled Senate approved an amended version of the House measure Thursday which senators changed to include tax rebates for low-income retirees and military veterans.

House lawmakers met in an evening session to quickly approve the final amended package.

The plan calls for tax rebate checks of up to 600 dollars for individual taxpayers and up to 1,200 dollars for couples, plus additional cash for dependent children.

It also expands financing opportunities in the housing market by allowing Fannie Mae and Freddie Mac, two mortgage finance companies, to purchase or guarantee mortgages larger than 417,000 dollars up to 729,750 dollars.

Lawmakers said it will not benefit wealthy Americans, as tax relief begins to phase out for individuals earning 75,000 dollars and for married couples with a combined income above 150,000 dollars.

It will, however, provide "unprecedented" help to some 35 million families who work but make too little to pay taxes, they said.

People who earned at least 3,000 dollars in 2007 are eligible for 300 dollars per individual or 600 dollars per couple, lawmakers said.

Democrats and lawmakers from Bush's Republican Party applauded the plan.

"Today's agreement is a victory for a better, more effective economic stimulus. Economists agree that consumer spending, fueled by tax rebates, can boost America's economy," said Democratic Senator Max Baucus.

Republican Senator Mitch McConnell said:"This is not a victory for Republicans or Democrats. This is a victory for the American people."

It's unclear, however, how much of a boost the vast package will give the troubled economy. Some economists have voiced doubt about whether the plan will deliver a needed shot-in-the-arm to growth.

Its success will depend in part upon whether Americans spend their rebate checks and boost consumer spending or stuff them in bank accounts.

Political concern about the economy has increased amid worries the country is on the cusp of a recession.

The Federal Reserve has slashed interest rates since September in a bid to fire up economic momentum, which slowed significantly to a 0.6 percent annualized crawl during the fourth quarter of last year.

Paulson said the government could start mailing out tax rebates to those eligible to receive them by early May.

The U.S. Court of Appeals for the District of Columbia Circuit negated a rule known as cap-and-trade. That policy allows power plants that fail to meet emission targets to buy credits from plants that did, rather than having to install their own mercury emissions controls. The rule was to go into effect in 2010.

The court struck down the cap-and-trade policy and the Environmental Protection Administration's plan to exempt coal- and oil-fired power plants from regulations requiring strict emissions control technology to block emissions.

New Jersey and many other states challenged the policy in federal court. The agency defended the rule, saying it represented the nation's first attempt to control such emissions and would reduce mercury emissions by 70 percent.

The three-judge panel agreed with the states that the EPA did not have the authority to exempt the power plants. The court unanimously ruled that EPA's arguments were "not persuasive."

Mercury is a powerful neurotoxin that accumulates in fish and poses the greatest risk of nerve and brain damage to pregnant women, women of childbearing age and young children. Emissions of mercury total about 48 tons a year, most of it in the form of air pollution that winds up in waterways.

The states argued that the cap-and-trade system would endanger children near some power plants that pollute but which also use credits to do it legally.

"This means the EPA is going to have to go back and do a real job of regulating all the toxics coming out of these plants," said attorney James S. Pew, who argued on behalf of several environmental organizations that filed documents in the case.

Joining New Jersey in the lawsuit were: California, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Mexico, New York, Pennsylvania, Rhode Island, Vermont and Wisconsin.

Meanwhile Thursday, the Clinton campaign asked Obama to debate once a week, but he demurred.

Obama, riding a wave of fundraising from large donors and small Internet contributors, also raised $32 million in January.

Clinton acknowledged Wednesday that she loaned her campaign $5 million late last month as Obama was outraising and outspending her heading into Feb. 5 Super Tuesday contests. Some senior staffers on her campaign also are voluntarily forgoing paychecks as the campaign heads into the next round of contests.

Obama and Clinton outpaced all candidates in 2007, with each raising $100 million.

The Obama campaign said on its Web site that $7.2 million has been received since Tuesday evening. Campaign spokesmen said they were confident the figure was accurate.

Buoyed by strong fundraising and a primary calendar in February that plays to his strengths, Obama plans a campaign blitz through a series of states holding contests this weekend and will compete to win primaries in the Mid-Atlantic next week and Hawaii and Wisconsin the following week.

He campaigned in Louisiana Thursday. The state holds its contest Saturday.

Clinton, with less money to spend and less confident of her prospects in the February contests, will instead concentrate on Ohio and Texas, large states with primaries March 4 and where polling shows her with a significant lead. She even is looking ahead to Pennsylvania's primary April 22, believing a large elderly population there will favor the former first lady.

In a sign of Clinton's increasing concern about Obama's growing strength, her campaign manager, Patti Solis, sent a letter Thursday to the Obama campaign seeking five debates between the two candidates before March 4.

"I'm sure we can find a suitable place to meet on the campaign trail," Solis wrote. "There's too much at stake and the issues facing the country are too grave to deny voters the opportunity to see the candidates up close."

Obama rejected a debate proposed as soon as this Sunday to be broadcast on ABC, but his campaign spokeswoman Jen Psaki said Thursday, "there will definitely be more debates, we just haven't set a schedule yet."