January 25, 2008

Analysis: All on board for stimulus?

WASHINGTON - The ritual pledges of political cooperation are in place. Now the challenge for a lame duck Bush administration and an election-year Congress is to agree swiftly on an economic stimulus plan.

The voters will be watching. And not all that patiently, judging by the polls that show the economy steadily becoming their biggest concern in the wide-open race for the White House.

"This package is not going to be all things to all people," says House Speaker Nancy Pelosi, who has talked with President Bush and met twice in two days with her Republican counterpart as part of an attempt by all officials to display an eagerness to work together.

Not all House Democrats. The rank-and-file run the gamut from liberals little concerned with the deficit to moderates who want Congress pay for whatever it does.

Nor all House Republicans, who find unity in tax cuts but division in higher spending and bigger deficits.

Not to mention the Senate, where Democrats control a scant majority, and Republicans have the power to block passage of whatever them deem inadequate.

Or the White House, which seems to recognize that making Bush's tax cuts permanent is a non-starter in the Democratic-controlled Congress, in good economic times or bad.

"There is an agreement that we will work together to try to put together a package that truly is stimulative, that will happen quickly, says Rep. John Boehner of Ohio, the House Republican leader.

It's a start, although Pelosi seemed unable to avoid a jab at the president, who until Thursday had not called for short-term measures to stimulate the economy.

"The first step was that the president had to admit there was a problem," she told reporters.

The House began its work year on Tuesday, the Senate convenes next week for the first time in 2008 and so far, none of the top elected officials has suggested a timetable for action on a stimulus package.

Under discussion are possible tax rebates for individuals, breaks for businesses, additional funds for food stamp recipients and the unemployed and possible help for the states in the form of funds to finish partially completed construction project.

Quick agreement would be an exception, not the rule, in the current era of divided government, but both sides have a political motive as well as an economic justification for doing so.

After taking control of Congress for the first time in more than a dozen years, Democrats spent much of 2007 struggling with Bush over the Iraq War — and among themselves over how quickly to make the concessions necessary to win GOP approval for priorities such as a raise in the minimum wage and an increase in auto fuel standards.

The result was a race to the bottom in terms of public support, the president stuck in the mid-30 percent range in most opinion polls, Congress even lower.

Now, after a prolonged period in which terrorism and the war in Iraq mattered most to voters, the economy is rising to the top of the pile of issues.

"The war seems more stable, and in the meantime the economic situation seems less stable," says Democratic pollster Pete Brodnitz. One result is a spate of stimulus proposals from the crowded field of presidential hopefuls in both parties.

Rank-and-file lawmakers see the same polls, and they and the White House will soon have to decide whether to spend weeks of political brinksmanship or reach quickly across the aisle.

"The risk would be if you're seen as seeking short-term political advantage," said Rep. Barney Frank of Massachusetts, one of the most liberal Democrats in Congress. "We're ready to do this. We're ready to compromise."

"I'm hopeful of quick passage," said Rep. Jim McCrery, the Louisiana Republican who is senior on the tax-writing House Ways and Means Committee, and has announced plans to retire at the end of his current term.

Federal Reserve Chairman Ben Bernanke appeared before Congress during the day, and gave his blessing in advance for steps to give the economy a quick, short-acting jolt.

"Putting money into the hands of households and firms that would spend it in the near term" is a priority, he said, and anything else would raise deficits unnecessarily and could provide more medicine than the economy needs.

Within a few hours, the White House announced Bush intended to make a speech about the need for economic stimulus legislation on Friday.

A White House spokesman also said the president had concluded "some boost is necessary" for the economy, a significant shift from earlier statements that he was merely considering one.

Bush as well as White House officials quickly relayed word to congressional leaders that he would not use the occasion to press for a permanent extension of his tax cuts, a decision that removes one enormous potential stumbling block.

In muted terms, Boehner urged Democrats to respond in kind by not seeking provisions that will drive the cost of the bill up and the Republicans away. "For this bill to become law, it cannot become a Christmas tree," he told reporters in the Capitol.

From the White House, deputy press secretary Tony Fratto said he saw "no obstacle" to a speedy agreement.

No matter what the intention, it's the type of comment that can either encourage — or inflame — the Democrats in Congress.

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