On the Hill, differing visions on economic stimulus

by Matthew Hay Brown

Democrats and Republicans on Capitol Hill today expressed optimism that they could quickly come to agreement on an economic stimulus package of the sort described this morning by President Bush – even as they described differing visions of the legislation they would support.

Consider the following statements by House Majority Leader Steny Hoyer and Senate Minority Leader Mitch McConnell. Hoyer, a Democrat, said he was “hopeful that we can come together;” McConnell, a Republican, said “agreement is within our reach.” But this is how they described the discussions already underway:

“There is a broad consensus that quickly enacting a simple, focused and temporary plan that puts money in the hands of low and middle-income Americans will be the most effective shot in the arm to our nation’s economy,” Hoyer said.

“There is an increasing, bipartisan agreement that an economic growth package must be aligned with our long-term economic interests to ensure maximum effectiveness,” McConnell said.

Democrats favor some combination of tax rebates – such as the checks of several hundred dollars that Congress sent to individuals and households in 2001 – extended unemployment benefits, home heating oil assistance and food stamp increases. Republicans back tax breaks that they say would secure jobs and create new employment by encouraging business investment.

The sides also differ on how to pay for a package. Under the “Pay-As-You-Go” rules favored by Democrats, new spending must be offset by spending cuts or revenue increases elsewhere. Republicans oppose tax increases, and some favor taking the opportunity of a stimulus package to make the Bush tax cuts permanent.

“It is clear that hard working families in America are struggling to make ends meet and that the economy needs a boost,” Rep. Jeb Hensarling, chairman of the conservative Republican Study Committee, said today in some of the most detailed comments on what a stimulus package could entail.

“Conservatives know that it is never a bad time to let families keep more of their own money,” the Texas Republican continued. “We agree that now is an especially good time for family tax relief given rising energy, food, and tuition costs. However, temporary consumer tax rebates should not be confused with economic stimulus. I remain concerned that in the rush to act, an opportunity to put together legislation that will actually grow and stimulate the economy is being missed.

“The last time our country faced recession, rebates were helpful to consumers but did little to turn around the economy,” Hensarling said. “History shows us that the best way to provide an economic turnaround, preserve jobs and spur economic growth is to ensure that job creators face a lower tax and regulatory burden. … Nothing would help our economy more than making permanent the tax relief that is soon to expire. Congress should also immediately enact laws that reduce the corporate tax rate and capital gains rate while indexing gains attributable for inflation."

House Minority Leader John Boehner suggested a path that could involve both a payout and tax breaks.

“Republicans believe this package should focus on putting more money back into the pocketbooks of middle class families and help employers who create jobs for the American people,” the Ohio Republican said. “I am particularly pleased that the President’s principles for economic growth make clear that tax hikes and unrelated or wasteful spending increases are a non-starter. We need to stimulate the economy, not government programs.”

House Speaker Nancy Pelosi said Democrats welcomed Bush’s “willingness to work together with Congress to provide urgent relief to the millions of Americans facing economic hardships.

“We have agreed on the need to provide assistance immediately, and Congress will continue to work with the Administration to stimulate the economy in a way that is timely, targeted, and temporary,” Pelosi said, repeating the phrase coined by former Treasury Secretary Lawrence Summers that has become a Democratic mantra in the stimulus package discussions.

“We must invest our resources in such a way that injects confidence and consumer demand, promotes economic growth, and creates jobs.”