Doubts Arise Over Obama Stimulus Plan

After calling on Congress to “act boldly and act now,” Barack Obama got a lesson Thursday from his old Senate Democratic colleagues: a little more time for takeoff could avoid a crash landing of his economic recovery plan.

At a closed-door party meeting in the Capitol, top political and economic advisers to the president elect were met with questions and pressure for adjustments to the $775 billion plan if lawmakers are to meet Obama’s schedule of completing passage by mid-February.

“There is nothing written in stone,” said Senate Majority Leader Harry Reid (D.-Nev.) after the two-hour session with Obama political strategist David Axelrod and former Treasury secretary Lawrence Summers, a senior economic adviser to the new president. And Senate Finance Committee Chairman Max Baucus (D.-Mont.) said that changes will have to be made to “improve” upon the Obama plan.

The major focus is on the $300 billion in tax cuts included in Obama’s recovery package, now priced at $775 billion altogether over two year but likely to grow. A proposed jobs creation tax credit was ridiculed by senators as ineffective in today’s economy. Leading Democrats even challenged Obama’s signature plan to provide a $500 tax credit to offset the cost of payroll taxes that hit hardest among lower income workers.

“I just don’t think it works. I don’t think that’s going to give much lift to the economy, as well intended as it is,” said Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat who also sits on the tax writing panel. “From a fairness standpoint and a distribution of burden, I can understand it completely. But in terms of lifting the economy?”

The meeting with Axelrod and Summers followed an earlier closed door executive session of the Senate Finance Committee Thursday morning at which many of the same complaints were heard.

In each case, the tone was described as businesslike, more questioning than hostile and even Republicans said later that a plan could jell for all sides.

But at this stage Democrats are in too many different places to proceed quickly despite a common belief that action is needed. “There were a lot of questions asked about the efficiency of the tax provisions,” said Baucus. “When all is said and done we’ll pass legislation that’s fairly close to the proposal we’ve been discussing. However it’s going to be improved upon. It’s going to take a lot of intense vigorous discussion in a mutual search for what’s right… We’ve got to do this right.”

Sen. John Kerry (D-Mass.), an early Obama supporter, was among those pressing for more to be done in the energy field. Conrad wants a homebuyer tax credit to help housing prices. Sen. Ron Wyden (D-Oregon) argues for a greater emphasis on tangible infrastructure investments in roads, bridges, transit.

“If anything the discussions today have reinforced my judgment that the focus ought to be on roads, bridges transportation systems,” Wyden said. And he warned colleagues that they must be prepared to defend their choices to bailout-weary voters—still riled by Treasury Secy. Henry Paulson’s handling of the $700 billion financial markets rescue fund enacted last October.

”The bar is very high. The public wants to understand how its money is going to be frittered away,” Wyden said. “Members who vote for this package are going to have to be able to go home and say this is not going to be like the $700 billion bailout, where a huge amount of was committed to a program that a few weeks later the Bush Administration said they wouldn’t do. That’s what the Congress is up against.”

Obama’s camp is mindful of these political risks as well. Obama began the day with a speech in Virginia addressing the need for his package, and Axelrod, the political pro, was dispatched alongside Summers, a more academic and distant personality, to outline a communications strategy for going forward.

Sen. Evan Bayh (D., Ind.) said that the presentation—including charts-- emphasized both the seriousness of the economic crisis and Obama’s high standing in public polls at this juncture.

“It is the greatest crisis since the Depression, inaction is not an option,” Bayh said, summarizing Axelrod’s arguments. The fallout from Treasury’s handling of the $700 billion financial markets rescue fund is real, he said, “but there’s a new team that will have transparency and accountability in place and it will ensure that the mistakes made before will not recur."

Democratic pollster Peter Hart told Politico that the public is wary of the economic threat, wants action, but also is skeptical after Paulson’s performance.

“People want to do something. They just don’t have enough insight into what that is,” Hart said. “If this is seen as government pork, the public will rebel.

“The biggest downside for Obama is Hank Paulson,” Hart said. “Hank Paulson has poisoned the well because of the high-handed manner that he went about this.”

Judging from Thursday, Obama’s other problem may be that senators are as uncertain as the public about which direction to take. This seems to be less the case thus far in the House, but that may testify more to the power held by Speaker Nancy Pelosi (D.-Cal.) and her new majority.

“We have been so used to an uphill fight; but now we have arrived in a big, strong – an 80-vote majority in the Congress, in the House, with a Democratic President and White House,” Pelosi told reporters Thursday. “So we have opportunity to move quickly – not hastily, but quickly – to get this done.”

“We will have a bill before the Presidents’ Day recess,” she said, the Feb 14th deadline set by Obama. “If we don't have a bill before the Presidents recess, there will be no Presidents’ Day recess. We are not going home without an economic recovery package.”

“Democrats have arrived,” Pelosi said. “We will work hopefully as much as possible in a bipartisan way. Hopefully, our Republican colleagues will share that view. And, as I say, we can't go home without an economic recovery package, and we won't.”

As if to underscore the point, House Appropriations Committee Chairman David Obey (D.-Wis.) called in his ranking Republican, California Rep. Jerry Lewis, to go over the schedule and invite him to participate.

“There’s little question but we are on a very difficult path,” Lewis told Politico later. “The bottom line is they do have the votes.”

Copyright POLIT - Politico
Contact Us