Congress looks to stimulate economy
WASHINGTON (AP) - January 11, 2008 But even as momentum builds behind those ideas - with President
Bush increasingly open to proposing a stimulus package later this
month - the effort is fraught with election-year risks for both
Democrats and Republicans.
Any politician who promises action on the economy had better
deliver. Failure to enact those or other pump-priming measures,
which is possible, will register with voters increasingly alarmed
about their own well-being.
On the other hand, not trying is a losing strategy too.
Democrats see little choice but to make the effort.
"There's a risk in doing nothing and a risk in doing
something," said Illinois Rep. Rahm Emmanuel, who heads the House
Democrats' campaign organization. "I'll take the risk of doing
something for middle-class families versus the risk of doing
nothing."
The White House also is examining broad-based tax rebates
comparable to the $300-600 checks sent to taxpayers in 2001, as
well as bigger tax breaks for businesses that invest in new
equipment.
But Bush's advisers and Republicans are skeptical of new
spending initiatives like extended jobless benefits and higher food
stamp payments; or accelerating highway, bridge and other public
infrastructure projects to address rising unemployment among
construction workers.
Complicating the debate is the fact that Democrats and Bush also
have a poor track record of working together.
Both sides insist that work on competing stimulus plans is just
beginning and that no decisions have been made about what might be
included. The White House says it's not a sure thing Bush will even
propose a plan if upcoming economic data don't suggest a deepening
downturn of the economy.
Expectations are growing, however, that some action on an
economic stimulus bill is inevitable.
The mantra among Democrats and many economists is that any
stimulus bill should be timely, temporary and targeted toward
people most likely to funnel the money right back into the economy.
As such, some Democrats are suggesting limiting tax rebates to
lower-income and middle-class families and people with children.
"Our initiative will assist hard-hit families by promoting
consumer confidence, economic growth and job creation," House
Speaker Nancy Pelosi, D-Calif., said in a statement Tuesday. Pelosi
promised help for the unemployed, people hurt by higher health care
and spiraling energy prices, as well as those hit by the subprime
mortgage crisis.
Democrats also are eyeing extending unemployment benefits beyond
the 26-week limit and a temporary increase in food stamp benefits,
Pelosi's spokesman, Brendan Daly, said. He cautioned that any
decisions would be made only after lawmakers return to Washington
next week.
Liberal economists say boosting food stamps is one of the most
efficient ways of pumping money into the economy, an idea
surprisingly embraced by GOP economist Martin Feldstein at a
Brookings Institution forum on Thursday.
Still, the White House and Democrats are probably on a collision
course. Bush is likely to resist social spending initiatives or
efforts to restrict tax rebates to a relatively narrow segment of
the public. He is sure to press to extend his 2001 and 2003 tax
cuts - something Democrats promise to reject.
There's naturally a temptation to use the debate to score
political points in this election year. Democrats, for instance,
could provoke a veto clash. That's the course they took in last
year's debate over expanding a popular health insurance plan for
children.
With an economy that may be teetering on the edge of a
recession, congressional Democrats see a need to deliver results
rather than be viewed as seeking political advantage. That means
limiting the wish list of liberal Democratic lawmakers if they are
to get an agreement with Bush.
Senate Democrats have taken fewer steps toward fashioning a
stimulus package. Their deliberations are made more complicated by
Senate rules that effectively require GOP support for almost any
bill. Many Senate Republicans are looking for an opportunity to
extend Bush's 2001 and 2003 tax cuts beyond their scheduled
expiration at the end of 2010.
Leaders in both parties also will have to deal with the deficit
hawks in each. The idea behind the stimulus effort is to pump money
into the economy, not to pump some in and suction out the same
amount elsewhere in order to not add to the budget deficit.
Many Democrats have generally promised to live by a "pay as you
go" rule against deficit-financed legislation. Some of them are
still steaming over a decision to waive that rule last month when
passing a one-year, $50 billion "fix" of the alternative minimum
tax, and they're already resisting the idea of waiving it again for
any stimulus package.