Stimulus Momentum Builds

Posted November 16, 2009 at 6:35pm

With unemployment above 10 percent and Democratic poll ratings dipping, anxious leaders on both sides of the Capitol are gathering ideas and building momentum for what could be a significant new jobs package early next year.

President Barack Obama has called for an economic summit at the White House on Dec. 3, which could lay the groundwork for a deal on another stimulus plan. At the same time, resistance among Members to a significant new economic package appears to be fading.

For most of the year, Democratic leaders put off the idea of another stimulus after passing the first $787 billion spending plan in February. They cautioned publicly that the package needed time to work but privately noted that Members had a severe case of stimulus and bailout fatigue.

However, the continued uptick of the unemployment rate — now at 10.2 percent — has renewed the once-taboo idea of another stimulus.

“While Members are definitely concerned about spending, there also is a recognition that unemployment is over 10 percent, and Members want to be able to say they are doing something on unemployment and jobs,— one House leadership aide said.

House Democratic leaders were planning to huddle with Members on Monday night to discuss what to put in such a package.

Meanwhile, on the Senate side, Majority Leader Harry Reid (D-Nev.) has told his caucus that a jobs package would be a top priority early next year.

“Although we believe passing health care will help our economy over the long haul, we feel we need to do something that will provide a more immediate boost,— a Senate Democratic leadership aide said. “Sen. Reid will be working with his caucus and the administration to put together such a package in the coming weeks so we can turn to it as soon as possible after completing health care.—

Members have been quietly lining up behind various ideas for months. One proposal has already been signed into law — an expansion of a first-time homebuyer tax credit, along with an unemployment benefit extension to the hardest hit states.

But far bolder and perhaps more expensive plans could be in the offing. One idea that continues to get talked about is a $500 billion transportation reauthorization bill, which is up for renewal anyway and would produce tangible projects and jobs that are easy for voters to see and lawmakers to tout.

The bill authored by House Transportation and Infrastructure Chairman James Oberstar (D-Minn.) has been pushed hard by Majority Whip James Clyburn (D-S.C.) and Democratic Caucus Chairman John Larson (Conn.), among others.

“It’s not like there aren’t good jobs bills available,— a senior Democratic aide said.

The question for Congressional leaders has been whether the spending in such a plan could enter the economy quickly enough and how to pay for it. Some Democrats, led by Rep. Peter DeFazio (Ore.), are pushing for a new transaction tax on Wall Street to help rebuild Main Street, believing it would put Republicans opposing any tax increases in the position of backing Wall Street traders over middle-class Americans.

But there also have been concerns that such a bill could be lampooned as pork-laden, given that it will be packed with earmarks. The last transportation bill, crafted when the GOP was still in charge, included the “Bridge to Nowhere— in Alaska that became a symbol of wasteful spending.

Leaders kept traditional earmarks out of the stimulus package earlier this year exactly because of that fear — although that didn’t stop Republicans, who voted en masse against the plan, from blasting it as an unnecessary spending spree.

The next stimulus plan could go far beyond new roads and bridges, however. Speaker Nancy Pelosi (D-Calif.), who has already held her own meeting with economists who universally recommended additional spending, has noted that Appropriations Chairman David Obey (D-Wis.) has presented an array of potential items behind the scenes. Publicly, Pelosi — who has eschewed the word stimulus — has mentioned such items as more aid to cash-strapped states and a tax credit for hiring new workers.

Obey, for his part, strongly endorsed another stimulus package Nov. 6, saying the economy needed “a bigger kick.—

“While the Recovery Act is working, as I said when we passed it, it is not big enough by itself to do everything we need it to do to get workers back to work,— he said. Obey also minimized the importance of the massive short-term deficit.

“The longer it takes the unemployed to get a job, the longer it will take us to get our deficit down,— he said.

House Republicans, meanwhile, have used the latest chatter as another reason to argue that the Democrats’ first stimulus was a failure. The question “Where are the jobs?— has become a rallying cry for GOP lawmakers denouncing the first spending plan.

Republicans have continued to push a package of several hundred billion in tax cuts that they first proposed early this year, with Conference Chairman Mike Pence (Ind.) repeatedly urging Democrats to take up their plan.

But GOP Members generally want any tax relief to be paid for by cutting spending from the existing stimulus package, a non-starter with Democrats.