Road Map: Senate Stimulus Package Still Looking for Love

Posted February 2, 2009 at 6:45pm

The fix is in. Stung by GOP — and even some Democratic — criticism of their so-called economic recovery behemoth, Senate Democrats and the White House are scrambling to repair the package so that it might appeal to Republicans and actually stimulate the economy before October 2010.

[IMGCAP(1)]But before it gets better, it’s likely to look a whole lot worse, as the Senate appears set to add tens of billions of dollars more to the already $888 billion measure this week.

Though the Senate amendment process may create what looks like a monster, Democratic leaders are looking to the conference committee between the House and Senate, where they expect to remove items that smell like pork or can’t be spent in the near term.

It won’t be the wholesale rewrite that Republicans have been calling for, but Democrats expect it will be enough to persuade some GOP Members in both chambers to change their tune. And the key, Democratic aides said, is that the White House will be intimately involved in the final rewrite.

“The White House is going to have a heavy hand in the conference process,” one senior Senate Democratic aide said.

Indeed, that appears to be part of the reason President Barack Obama has sounded so confident about getting GOP support for a final bill, which House and Senate leaders hope to complete by the end of next week.

The White House push to get a big bipartisan vote for the stimulus measure is not as altruistic and high-minded as it sounds. Democrats acknowledge that Obama wants both parties to suffer whatever political consequences might come from passing the massive spending bill, just in case it doesn’t work the way it’s supposed to.

Still, White House spokesman Robert Gibbs signaled Monday that the president would go only so far to please Republicans, offering far more lavish praise for the legislation as it stands than he has previously. “The president is pleased with the package that passed the House,” Gibbs declared, putting the presidential seal of approval on a bill House Republicans unanimously rejected.

“Undoubtedly that package will be strengthened and changed some through the process, but it meets the test that the president laid out originally to, first and foremost, create jobs immediately and to strengthen, for the long-term, our economic growth,” Gibbs said.

Gibbs added for good measure that, in the view of the White House, Republican objections to wasteful spending in the bill centered on seven hundredths of 1 percent of the total. Those comments were likely to sit well with House and Senate Democratic leaders, who went to the White House Monday afternoon to talk strategy with the president.

In the meantime, Democrats said the Senate will likely bloat up the bill to over $900 billion with both Republican and Democratic amendments, such as a $20 billion proposal by Sen. Johnny Isakson (R-Ga.) to provide $15,000 in tax breaks to homebuyers, and a plan by Sens. Dianne Feinstein (D-Calif.) and Patty Murray (D-Wash.) to add $25 billion to highway and mass transit spending.

But Democrats envision the $70 billion patch for the alternative minimum tax coming out in conference, since making sure middle-income tax payers don’t get hit with higher tax rates could pass easily on its own later this year. “It gets the numbers down without sacrificing anything,” the senior Senate Democratic aide said.

Republicans shouldn’t expect to win their push to set aside nearly a third of the bill — or $300 billion — to create a program to encourage banks to offer 4 percent to 4.5 percent mortgages to credit-worthy homebuyers. Mortgage giants Fannie Mae and Freddie Mac, which are now run by the government since their near-collapse last year, would be required to buy the mortgages from banks under the GOP proposal.

Last Thursday, Senate Majority Leader Harry Reid (D-Nev.) said he is open to changing the bill at the margins, but he echoed Obama in saying that the GOP’s desire to rewrite the measure to address housing and bank capitalization would probably not fly.

“Just because there isn’t enough housing articles in this legislation to please some people doesn’t mean it won’t get done in other ways,” said Reid, alluding to a massive financial industry rescue package that the White House plans to send to Congress after the stimulus debate.

Even without substantial changes, it’s unlikely that vote on Senate passage this week will mirror the House vote, where every Republican spurned Democratic entreaties to support it.

Still, Senate Democrats said they would not be giving up real estate in the stimulus to the GOP for nothing.

“Nothing happens in a vacuum around here,” another senior Senate Democratic staffer said. “If Republicans make changes to the bill, they’re going to have to provide some votes.”

Senate Minority Leader Mitch McConnell (R-Ky.), however, laid out the challenge facing Democrats as they seek to siphon off Republicans.

“We know we have a huge economy, and we know we need to jump-start it, but most of my Members feel we can do it for less than what is currently being proposed,” McConnell said at a press conference on Monday.

Still, he said, he expects Democrats and Republicans to band together on some GOP amendments.

“We can’t anticipate that we’re going to win them all. … But I can tell you this, with regard to this measure that’s on the floor this week: There is considerable — and you’re hearing it — considerable Democratic Senatorial unrest about this package,” McConnell said. “I think there’s a bipartisan feeling that this is not the way to get the economy moving. And hopefully we’ll see that exhibited on various amendments where we may have some bipartisan success in modifying the bill.”

It’s not clear how many Democrats might vote against the stimulus bill, but Sens. Kent Conrad (N.D.) and Ben Nelson (Neb.) have been outspoken about their concerns that the measure might not have the right elements to truly stimulate the economy.

Key to wavering Members’ support is who to believe on how fast all this money can be spent. The Congressional Budget Office estimates that only 64 percent of the $816 billion House-passed bill could be spent by the fall of 2010, while the Senate Finance and Appropriations panels, backed by a separate CBO report, estimate that in the Senate version, 78 percent could be doled out by then. The White House has said it wants at least 75 percent to be spent in the next 18 months.