Battle Lines Could Shift Over Next Bailouts

Posted February 15, 2009 at 10:53am

The strict partisan lines that marked debate over the economic stimulus package seem likely to shift when Congress turns to addressing the ailing financial and housing sectors, lawmakers from both parties suggested on Sunday.

On ABC’s “This Week,” Reps. Peter King (R-N.Y.) and Maxine Waters (D-Calif.) and Sens. Lindsey Graham (R-S.C.) and Charles Schumer (D-N.Y.) bickered along party lines over the American Recovery and Reinvestment Act, which passed the House with no Republican votes and was approved by the Senate with the votes of just three GOP moderates. Obama is due to sign the bill into law on Tuesday.

But in discussing the next economic issue set to come before Congress — what to do about the clogged lending and depressed housing markets — their opinions were more varied and appeared to suggest that some philosophical and practical agreement might be possible among Democrats and Republicans.

The four lawmakers interviewed on “This Week” indicated their support for Treasury Secretary Timothy Geithner’s efforts, while forming odd-couple alliances in terms of how to deal with these problems.

Graham and Waters said they were not opposed to nationalizing U.S. banks, if that’s what it takes to revive lending and turn around the housing industry; King and Schumer said they were against nationalization.

Obama’s chief political adviser, David Axelrod, declined to rule out nationalizing the banks during an appearance on NBC’s “Meet the Press.”

Waters acknowledged the political difficulty of even discussing nationalization of a major industry.

“The word nationalization scares the hell out of people,” Waters said. “And so, the debate has opened up now, and that’s good. Let’s talk about it.”

Waters added, “Citibank is probably almost nationalized with the amount of money we’ve put in it. But I don’t think we’re ready to move to the point of a formalized nationalized banking program. We may get to that point, and I’m not opposed to that. But the discussion is just opening up, it’s new for America.”

Graham said: “We have got so many toxic assets … I think we’re going to have to do something we never envisioned a years ago. … I would not take out the idea of nationalizing the banks.”

Schumer, who is the vice chairman of the Senate Democratic Conference, strongly disagreed, making what might be considered a Republican argument against the idea of nationalization.

“I would not be for nationalizing. Big government’s not good at making these decisions as to who gets loans, and how this happens,” Schumer said.

King said that he and Schumer are “somewhat on the same page on this.”

Meanwhile, the partisan debate over the stimulus bill continued unabated, with Graham and King arguing that Democrats rammed it through Congress without their input and that it will fail to create jobs and stimulate the economy — and Democrats arguing the opposite.

“I think we missed the mark,” Graham said. “We increased government; we did not increase jobs.”

“We give more tax relief to the arts than to small businesses,” King added.

“It will keep or create jobs, put money into hands of consumers so they spend it, and build infrastructure. To do nothing risks a depression,” Schumer countered.

Noted Waters: “What this bill does is give tax breaks to 95 percent of American workers. … When you couple these tax breaks with the jobs created in infrastructure … we’re going to save jobs and keep businesses from laying off people. … This is exciting.”