New Economic Plan Weighed
But Stimulus’ Label Shunned
Democrats are scrambling to define a new plan to boost the economy as unemployment hurtles toward politically perilous double digits, after months of insisting that talk of another stimulus package was premature.
Just don’t call the as-yet-unwritten new proposal “stimulus,— they insist.
“The Speaker never used the word stimulus,— said Speaker Nancy Pelosi’s spokesman, Nadeam Elshami, moments after the California Democrat listed a laundry list of stimulus items under consideration last week, including an extension of unemployment benefits.
Not that they have a name yet for what they want to call the package.
“It’s an ongoing effort to build on the recovery package and other measures we passed this year to grow the economy and create jobs after years of mismanagement by Republicans,— Elshami insisted later. “It’s about jobs.—
Regardless, Pelosi’s comments, as well as similar ones coming from some Senate Democrats and the White House, have opened the door to a fresh flood of criticism from Republicans who have declared the earlier $787 billion stimulus package a failure and set off a race to the trough by every K Street lobbyist worth his or her salt.
Democrats are both straining to defend their earlier effort — contending that it prevented a recession from becoming a depression and has had measurable impacts across a range of industries — and noting that they originally wanted a larger one only to pare it to satisfy a few Senate Republicans.
Pelosi and other Democrats, meanwhile, have complained that they haven’t gotten credit for preventing layoffs of hundreds of thousands of teachers, police officers and the like with massive aid to the states in the first stimulus package.
“How do you prove a negative?— asked one Democratic aide.
But with hundreds of thousands of workers being added to the ranks of the unemployed every month, Democrats decided that inaction heading into an election year is more dangerous than taking another stab at kick-starting the economy.
How much this will all add up to is anybody’s guess. Pelosi said she wants to hear from economists before making that decision.
But Democrats seem to be trying to keep the package small enough so they can contend it is merely tweaking earlier efforts and won’t dramatically expand the deficit.
“There is a general view that since much of the first stimulus package has not yet impacted the economy, a second one is not necessary,— Sen. Charles Schumer (D-N.Y.) said in a statement Friday. “But helping the unemployed by extending jobless and health insurance benefits — along with pinpointed aid to areas like housing and small business lending — makes some sense.—
Already, the real estate lobby looks to be a winner, with Pelosi specifically mentioning an extension and possible expansion of an $8,000 new homebuyer tax credit due to expire at the end of November and a net operating loss provision of particular importance to homebuilders, real estate interests and other businesses that is also supported by Republicans.
A tax credit for hiring workers has been floated, as has accelerated depreciation for new equipment, more aid to the states and another one-time check to Social Security recipients. A host of tax break extensions seems likely to be included, as are extensions of unemployment benefits and health care subsidies for the recently unemployed.
One idea getting a big push from some House Democratic leaders, including Caucus Chairman John Larson (Conn.), as well as a long list of business interests, is to pass the $500 billion, six-year transportation package put together by Transportation and Infrastructure Chairman James Oberstar (D-Minn.). Democrats would need to find new revenue if they choose to comply with pay-as-you-go rules, and one option under consideration is a tax on Wall Street transactions.
“Wall Street needs to be a part of restoring American prosperity,— one senior Democratic aide said, adding that doing the transportation bill has political benefits over a classic stimulus package.
“Compared to a package of esoteric, small tax provisions, the public understands rebuilding crumbling roads and bridges that they travel every day and what it would mean for the job market,— the aide said.
“The real drag is the White House,— the aide said. The White House has sought to put the transportation bill on the slow burner, and politically it can be lampooned because it is packed with earmarks. But a three-month extension of the bill expires at the end of the year — lining up perfectly with the need for Democrats to find something to tout on the economy.
“It’s a gift that this bill is up for reauthorization this year,— the aide said. “It’s not only time, but would have a bold and dramatic impact on the country at a time when it really needs it.—
Democrats have also already been able to divide Republicans on the transportation issue, when an effort by House Minority Whip Eric Cantor (R-Va.) to whip against a three-month extension was rejected by the majority of the Republican Conference.
“What moderates they have left would have a hard time voting against it,— the Democratic aide predicted. “They’d be seen as defending Wall Street.—
But Republicans scoff at such talk, and they have been eager to rip Democrats’ newfound interest in another stimulus.
“After promising that their so-called stimulus would work immediately and prevent unemployment from going over 8 percent, the American people are right to ask, Where are the jobs?’— said Antonia Ferrier, spokeswoman for House Minority Leader John Boehner (R-Ohio). Ferrier also ripped the possibility of a tax on Wall Street transactions.
“More job-killing tax hikes during a severe economic downturn? They’ve got to be kidding. Goes to show that there isn’t a tax increase that Democrats don’t like.—
Republicans, meanwhile, are working on their own stimulus proposal, building on the one they offered as an alternative to the earlier Democratic package. Their plan includes big tax breaks for businesses, restrictions on lawsuits and another across-the-board tax cut for individuals.