Parties Dance Around Stimulus Plan Negotiations

Posted January 14, 2008 at 6:45pm

With talk of an economic stimulus package dominating Washington these days, Democrats and Republicans are acting like wallflowers at a high school prom — signaling to each other that they want to dance, while keeping their distance in order to play it off if rejected.

“There’s some flirting, but it’s a little cautious about this whole idea,” said one House Republican leadership aide.

[IMGCAP(1)]Indeed, Senate Majority Leader Harry Reid (D-Nev.) and Speaker Nancy Pelosi (D-Calif.) sent President Bush a letter on Friday in what at first glance appeared to be a plea for pre-State of the Union negotiations on any stimulus package. But the very next day, Democratic Senatorial Campaign Committee Chairman Charles Schumer (N.Y.) appeared to write off the White House as a willing partner.

“Unfortunately, this administration seems satisfied with the current state of the economy and the fortunes of the middle class. Democrats are not,” Schumer said as he delivered the party’s weekly radio address.

One Senate Republican leadership aide criticized Schumer’s comments, saying, “It’s difficult to call for bipartisan action on the one hand, and then attack on the other.”

The House GOP aide also argued that Democrats’ decision to pursue contempt citations against the president’s chief of staff and former White House counsel for not complying with Congressional subpoenas undermines any bipartisan efforts on the economy.

“It poisons the well,” the aide said.

Still, Democrats say, they have made the political calculation that it will be more beneficial for them at the ballot box in November if they actually enact some sort of economic package, while Republicans, including the White House, appear to be wrestling with how much they should compromise with the year-old majority in order to create the best political outcome for themselves.

“In general, the goal is to get something accomplished, as opposed to having an issue,” one senior Democratic aide said. “There are plenty of other things you can have as an issue.”

Added a House Democratic leadership aide, “But the question is, will the White House want to cooperate or are they going to draw a line in the sand?”

Indeed, Democrats have been burned before — just a month ago to be exact. For months last fall, they seemed to be begging Bush to come to the bargaining table on the annual spending bills as they faced his threatened vetoes and no way to override them in either chamber. But Bush steadfastly refused to negotiate, and Democrats in December were forced to dramatically pare down their spending wish list to accommodate the president’s position.

That’s probably why Democrats, on the one hand, have offered to hold off on unveiling their pre-recession plan if the White House will sit down with them before the Jan. 28 State of the Union address, while on the other hand, they will be talking up a storm about what they want to do in the next few weeks.

“There will be a Democratic proposal sketched out prior to the State of the Union,” the senior Democratic aide said. “But that doesn’t preclude us from sitting down with the president and negotiating what it will actually look like.”

So far, Democrats are gravitating toward proposals that Republicans are apt to reject outright because they entail spending money on social programs like food stamps and unemployment or on direct aid to states to hasten the completion of infrastructure projects. Democrats also appear to be coalescing around the notion of sending out tax rebate checks to workers.

Democratic aides said time is of the essence and that they hope to pass something within the next two months to stave off a recession. But they remain deeply skeptical of whether Republicans — on the Hill or in the White House — will be willing to help them achieve what likely would be played as a significant Democratic legislative accomplishment.

Of course, the White House appears to be sending mixed messages, too — having private negotiations with some Congressional Democrats while playing down Reid and Pelosi’s call to meet before either side unveils a stimulus plan. Democrats have been anxious about the president’s ability to define the debate when he gives his State of the Union address next week.

“A lot of this depends on how the president frames it and how Democrats respond,” one senior Senate GOP aide said.

Plus, Republicans in Congress appear somewhat split on how to handle the issue. Some said they’re not impressed with the economic proposals that the Democrats have floated, such as providing additional funding for low-income home heating-oil assistance and extending unemployment benefits.

“A lot of things sound nice. A lot of things are politically popular, but are they going to have an impact?” asked the Senate Republican leadership aide.

Others in the GOP said it would behoove them to reach a compromise, even as they take some of their guidance from Bush.

“If we’re not all getting the signal loud and clear that voters are getting fed up with politics as usual, then we need to get our ears cleaned,” another senior Senate GOP aide said. This aide added that Senate Minority Leader Mitch McConnell (R-Ky.) was sending signals to his Conference that they should try to find middle ground with Democrats.

Even if the president refuses to compromise, Democrats hope to siphon off Republicans wary of blocking or voting against an economic stimulus package in an election year.

If Bush emerges with an “ideological” package, one House Democratic aide said, “I think you’ll start to see factions of his own party distance themselves from him and start to work on something more reasonable.”

Of course, Democrats have the added headache of trying to decide whether they want their economic stimulus package to adhere to their newly reinstituted pay-as-you-go budget rules. Last year, the Senate showed a willingness — some might say a predilection — to slough off that rule for middle-class tax relief under the alternative minimum tax, but that decision nearly caused a revolt among Blue Dog conservative Democrats in the House.

And if Democrats decide to try to offset the costs of a stimulus with even narrowly targeted tax increases, Senate Republicans are likely to filibuster, as they did the House’s AMT bill last year.

Indeed, the crux of the Republicans’ nascent plan to stimulate the economy is targeted and accelerated tax breaks.

If Congress already seems hopelessly gridlocked, consider this: A Democratic Senate and a Republican House compromised in the months after the Sept. 11, 2001, terrorist attacks on a stimulus package that included both new spending and tax breaks.

“There’s definitely some tried-and-true bipartisan stuff,” the senior Senate GOP aide said of that deal’s potential to be a starting point for negotiations.

Of course, by the time that package finally passed in March 2002, the economy already was on the rebound.