The New York Times-20080127-For Speaker- Calculated Stimulus Steps

Return to: The_New_York_Times-20080127

For Speaker, Calculated Stimulus Steps

Full Text (956  words)

Representative Nancy Pelosi spent her first year as speaker battling her political opponents with mixed results. Now, she has begun her second session by antagonizing some of her allies with a major economic proposal that could mark a turning point in her leadership of the House.

Ms. Pelosi's decision to abandon central Democratic tenets of past economic recovery measures to instead funnel cash directly to more Americans is drawing criticism from some lawmakers, labor leaders and representatives of core Democratic constituencies who contend she settled for too little.

But her calculation was instrumental in reaching a quick accord on the $150 billion package with the Bush administration and House Republicans, an agreement that put her on a more equal policy footing with the White House and showed increasing confidence in asserting her authority.

There isn't any way you are speaker for a year and don't have growth, said Ms. Pelosi, referring to her personal and political development as she described her rationale in trading expanded unemployment benefits and added food stamp money for making 35 million lower-income households eligible for a federal check later this year.

The absence of those added benefits, long a cornerstone of Democratic economic dogma, has come under fire from Democrats and their allies inside and outside of Congress. Senators are promising to try to add those elements and others to the economic stimulus legislation when it moves across the Rotunda from the House, perhaps this week.

It is not the way I would have designed it, said Senator Kent Conrad, Democrat of North Dakota and chairman of the budget committee.

Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities, said he was startled to learn that the plan negotiated by Ms. Pelosi; Representative John A. Boehner of Ohio, the Republican leader; and the treasury secretary, Henry M. Paulson Jr., did not contain the jobless money and food stamp increase. Mr. Greenstein said those were tried-and-true methods of fueling the economy.

It just didn't make any sense to me to drop out the only two things that were the immediate acting elements, he said.

Ms. Pelosi, who put together the deal in a series of intense private meetings with Mr. Boehner and Mr. Paulson, said that she still supported both of those assistance programs, as she has for years, and that they could yet get an infusion of money this year.

But she said her intent was to try to come up with new ways to drive the economy, and she saw it as a fair bargain to force Republicans and the White House to endorse rebates going to millions of Americans who would not have qualified under the Republican proposal while cutting off refunds for high earners.

This is all part of who we are, said Ms. Pelosi about the traditional safety net programs, but weighing the equities of it, I thought it was very important to act on something that was precedent-setting in terms of focus on the middle class.

The final agreement showed that Ms. Pelosi, often viewed as a classic liberal, is not afraid to stray from liberal orthodoxy to advance her cause. And she again demonstrated that she is willing to buck the chairman of an important committee in the process. Representative Charles B. Rangel, the New York Democrat who is chairman of the Ways and Means Committee, was unenthusiastic about the agreement and had a long and private debate with the speaker.

She was really focused, and when she focuses on something she gets it done, said Senator Charles E. Schumer of New York, a member of the Democratic leadership. And she was tough.

Ms. Pelosi, who has said she intends to pursue a more bipartisan approach this year, said these talks were spurred by President Bush's recognition of mounting economic problems.

He needed the stimulus package, she said, indicating she thought Mr. Bush was late to the game. Any homemaker in America could have told him months ago that our country was heading for a downturn, and we needed a change in economic policy.

Other members of the House Democratic leadership dismissed criticism of the agreement struck by the speaker and said that Democrats last fall were already exploring remedies given signs of a faltering economy and the likelihood the decline would become a major election-year issue.

In recounting the stimulus negotiations, one Democrat noted that Ms. Pelosi quickly forced Republicans to abandon a push to make Mr. Bush's 2001 tax cuts permanent and blocked the White House inclination to allow rebates to much more affluent households. Then she was able to get a pact on payments for those who do not earn enough to pay taxes -- an idea many Republicans find highly objectionable.

But Mr. Boehner was willing to accept that approach in exchange for Ms. Pelosi dropping the demand for unemployment and food stamp money, two other ideologically charged issues for Republicans.

She played her poker hand perfectly, said Representative Rahm Emanuel of Illinois, chairman of the Democratic caucus.

But Ms. Pelosi had a hole card. As speaker, she wields the power to advance a bill on her own. If the economic stimulus talks had collapsed, she could always push a Democratic measure forward and force Republicans to get on board or oppose it in an election year. That fact was not lost on her fellow negotiators even though it was two against one.

I could put a bill on the table any day, she said. So I had that kind of leverage. We all knew we had to do something for the American people. The question was what?

[Illustration]PHOTO: Speaker Nancy Pelosi drew some criticism on the economy. (PHOTOGRAPH BY ANDREW COUNCILL FOR THE NEW YORK TIMES)