After the Senate passed a stimulus bill that key members of Congress now say “recklessly” shed much of the stimulus spending endorsed by the House, the Obama White House has been prodding members of the conference committee that will reconcile two very different proposals to restore funding for schools, health insurance and aid for struggling states.

“To make room for added spending, the White House, joined by House Democratic leaders, is pressing to scale back certain Senate-passed tax breaks,” according to the Wall Street Journal.

This is a dramatic step in the right direction by the Obama administration. And it seems to be working; House and Senate negotiators were meeting Wednesday amid mounting speculation that aid for school construction would be restored and money for the states would be increased.

Pressured by Senate Republicans, Democrats in that chamber bartered off too much of the stimulus spending, creating a bill that is less likely to provide the boost that is needed for a sagging economy. As Congressional Progressive Caucus (CPC) co-chairs Lynn Woolsey and Raul Grijalva note in a new letter to House leaders, “We are especially concerned that the Senate package does not invest in jobs — be they focused on ‘green’ technology, veterans, or sustaining the local prevailing wage.”

“Simply put,” argue progressive House members, “the Senate-passed version will not address the urgent fiscal, social, and educational needs of this country.”

Obama and his aides appear to have recognized this fact, and are now taking behind-the-scenes steps to address the damage done by the Senate.

Grijalva and Woolsey and the caucus they represent, which now includes roughly a third of all Democrats in the House (far more than the conservative “Blue Dog” Democrats, some of whom have sided with the Senate) are pushing for specific moves to renew a stimulus proposal that, after the battering it took in the Senate, is sagging almost as badly as the economy.

Here’s the letter the CPC co-chairs sent to House speaker Nancy Pelosi, D-California, and House Appropriations Committee chair David Obey, D-Wisconsin:

As co-chairs of the Congressional Progressive Caucus, we write to you today to express our great concern about H.R. 1, the American Recovery and Reinvestment Bill of 2009. Simply put, the Senate-passed version will not address the urgent fiscal, social, and educational needs of this country. In fact, we fear that we may only get one bite at this apple. Therefore, we must take this opportunity to act boldly now.

With the Senate having recklessly cut more than $100 billion from the House-passed package, our concerns are wide-ranging. We do believe, however, the most urgent attention must be paid to the following sectors:

1. Investing in America’s Future (Children): In the Senate bill, almost half of the funding cuts come from education. This is irresponsible and short-sighted. Eliminating funding for school construction not only hurts our nation’s children but it also impedes job growth. Additionally, the Senate cut funding for Head Start and Early Head Start from $2.1 billion to $1.05 billion. This chips away at our nation’s future and places an overwhelming burden on families already feeling the strain of a bleak economy. We request that you return funding to House-passed levels.

2. Investing in America’s States and Local Communities: Recognizing the squeeze being put on state and local governments, the House rightfully set aside assistance to ease the financial crisis at home. The Senate slashed that funding to $39 billion, a $40 billion reduction. States are seeing crises within education, healthcare, job training, and welfare programs. It is unclear how many states and localities will be able to function without the above mentioned funding streams. We request that you return funding to House-passed levels.

3. Investing in America’s Future Homeownership: As one of the key elements in the Bush recession, the housing crisis can be felt from Wall Street to Main Street. That’s why the Senate action is wrong-headed. The Senate bill zeroes out $2.25 billion in funding for the neighborhood stabilization program, which would have provided funds to states and localities to purchase and rehabilitate abandoned and foreclosed homes. The House allocated $4.19 billion for the program.We request that you return funding to House-passed levels.

4. Investing in America’s Healthcare: As fewer Americans have access to insurance and healthcare, the House appropriately invested in immediate and preventative care. The Senate bill cuts $5.8 billion that was directed towards grants and contracts to prevent illness through health screenings, education, immunization, nutrition counseling, media campaigns and other activities. The House has set aside $3 billion for prevention and wellness. Furthermore, the Senate version would cut $5 billion that is intended to help unemployed workers pay for health insurance, reducing the federal subsidy under COBRA coverage to 50% from 66%. Practically speaking, that ignores the fact that in many states the monthly amount of Unemployment Insurance benefits that newly unemployed workers will receive to pay for food and housing will be virtually wiped out by what they will have to pay to continue their health insurance coverage. We request that you return funding to House-passed levels.

We are especially concerned that the Senate package does not invest in jobs — be they focused on “green” technology, veterans, or sustaining the local prevailing wage. While the above mentioned are just the tip of the iceberg, they are among the most urgent. As the House and Senate bills move towards conference, we urge you to stand strong and advocate for the above mentioned House-passed funding, because a bill modeled on the Senate version could be difficult for many progressives to support.

Again, we look forward to working with you to bring back balance to the recovery package.

The proposal from Grijalva and Woolsey for renewing the stimulus package is hardly radical. It simply proposes the restoration of spending for job creation–the essential goal of the White House and its congressional allies. What makes it especially valuable at this point, however, is the specificity. The CPC co-chairs have provided Democratic leaders in the House, the White House and progressives around the country with a baseline from which to operate during what will be an difficult, at times bitter, struggle to change not just a piece of legislation but a Washington mindset that offers a compromised response to the worst economic crisis the country has experienced since the Great Depression.