The Wall Street Journal-20080112-Politics - Economics- Democrats to Test Unity On Stimulus Proposals
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Politics & Economics: Democrats to Test Unity On Stimulus Proposals
WASHINGTON -- As Congress returns to work, the Democratic majority faces a big test: How to remain unified and pass legislation on a defining election-year issue, even if it means compromising with the president.
Armed with ideas to kick-start the economy, Democrats in the House and Senate are intent on advancing economic-stimulus legislation this year, amid a worsening economic picture and concern among voters. To avoid public infighting, Democratic leaders are coordinating their efforts. And, at least initially, they are reaching out to President Bush to test the waters for a bipartisan deal -- a crucial step if a bill is to become law.
But Democrats in Congress and President Bush have little history of working together, and election-year pressures make getting a deal more difficult. Still, both sides are under pressure to be responsive to economic conditions and give their parties an accomplishment to show to voters.
Any deal would require big compromises. Democrats are likely to push for expanded unemployment insurance and aid to states. They also are discussing more federal funding for the Medicaid health program for the poor, larger food-stamp payments and accelerated spending on public-works projects -- all ideas likely to prompt Republican opposition.
The White House, meanwhile, has floated tax breaks aimed at businesses, a lower priority for many Democrats. And if President Bush pushes hard for extension of his 2001 and 2003 tax cuts, or Republicans insist on other permanent tax cuts, Democrats would bolt.
One area of common ground: Both sides are interested in distributing rebate checks worth several hundred dollars to provide a quick influx of cash to individuals. But who would get the checks is an open question. Democrats want as many low-income people as possible to get the checks, possibly including people who don't pay income taxes. The White House may prefer a more limited approach.
Democrats have not finalized a stimulus package, though aides have been preparing a list of options for lawmakers to consider when they return to work. The House comes back this week, the Senate the following week.
So far, Democrats are coalescing around the principles of "timely, targeted and temporary" for their proposals. In a letter yesterday urging a bipartisan meeting soon on the issue, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid wrote, "We want to work with you and the Republican leadership of the Congress to immediately develop a legislative plan based upon these principles so it can be passed and implemented into law without delay," the letter said.
As they put together their stimulus plan, Democrats acknowledge that compromise likely will entail some help for businesses, and have discussed an investment tax credit or the bonus depreciation write-off espoused by Mr. Bush.
"There are potential areas of agreement, and potential areas of disagreement," said Sen. Charles Schumer (D., N.Y.), who has been working on the stimulus plan. "The first question is how strongly the White House feels they need a stimulus package."
White House spokesman Tony Fratto said, "If the president announces any economic-growth policies, we expect to work in a bipartisan manner." Mr. Bush is consulting with his advisers about the need for a proposal, ahead of his State of the Union speech later this month.
The economy is a charged issue in the election campaign, as Democrats make the case they would be better stewards than Republicans, and Republicans counter that Democrats want to increase taxes and spending. The topic will become more charged if stocks continue their recent decline.
The discussion will continue as Congress returns and Democrats highlight their differences with Republicans on issues such as energy prices and health care. On Jan. 23, the House is set to vote again on whether to override Mr. Bush's veto of a children's health-insurance expansion, though no one expects the effort to succeed. Several top House Democrats -- Reps. James Clyburn, Barney Frank and Rahm Emanuel -- are set to make speeches on the economy early next week.
Democrats and Republicans say the best chance for getting a stimulus package is keeping the bill narrow.
"I think stimulus is most likely to happen if both sides agree to focus only on what's best for the short-run economy and not try to bring along their bigger agendas for the ride," said Jason Furman, an economic adviser in the Clinton administration who directs the Hamilton Project, an initiative at the Brookings Institution focused on promoting economic growth.
