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CQ TODAY - ECONOMIC AFFAIRS
Jan. 16, 2008 - 1:30 p.m.

Democrats Vow to Speed Economic Stimulus Package to Bush

By Benton Ives, David Clarke and Edward Epstein, CQ Staff

Democratic leaders plan to clear an economic stimulus package as quickly as possible this year, hoping to act before the economy worsens, lawmakers said Wednesday.

House Majority Leader Steny H. Hoyer, D-Md., said he thinks it's possible that a stimulus package could be on President Bush's desk in 30 days.

"We are very hopeful in our discussions with the Republican leadership and the White House,'' he told reporters. "I think there's a reason to be optimistic we can agree that acting quickly, timely, is important.''

Joint Economic Committee Chairman Charles E. Schumer, D-N.Y., concurred, saying Democrats were "united" in their efforts to get an economic stimulus package moving "as soon as possible."

"If this isn't done in the first quarter . . . it may be too late," Schumer said. "If you wait too long, you're going to lose maximum effect."

In a move that could ease the path to speedy action, Hoyer said he agreed with House Ways and Means Chairman Charles B. Rangel, D-N.Y., that a stimulus package should not be subject to pay-as-you-go budget rules that would require raising taxes to offset the cost of tax rebates or other stimulative provisions.

"Deficit spending is justified when you are trying to stimulate the economy,'' Hoyer said before meeting with Speaker Nancy Pelosi, D-Calif., and the House's two top Republicans, Minority Leader John A. Boehner of Ohio and GOP Whip Roy Blunt of Missouri, to discuss economic stimulus.

Schumer agreed, saying at a Joint Economic Committee hearing: "There is a growing consensus, not unanimous, in the Democratic caucus that paying for stimulus now would take away from the economic boost we are seeking to create."

Schumer said the package is expected to cost about $100 billion. While details have yet to be finalized, Democrats have consistently favored some form of tax rebate, in an effort to get cash into the hands of consumers, along with expanded unemployment insurance and food stamp benefits.

"Tax relief to upper-income people will not stimulate the economy because they won't necessarily spend the money,'' Hoyer said.

Meanwhile, House Republican Chief Deputy Whip Eric Cantor of Virginia and members of the conservative Republican Study Committee (RSC) touted a proposal Wednesday that focuses on tax breaks for businesses. "Job growth - not increased government spending - is the key to addressing the slowdown in investment due to the housing crisis," Cantor said.

The RSC's legislative proposal would reduce the corporate income tax rate from 35 percent to 25 percent. Democrats have been open to lowering the corporate tax rate but not necessarily as part of a stimulus package.

Other countries have dropped their corporate rates, creating concern that U.S. companies may be at a disadvantage. Last year Rangel proposed legislation (HR 3970) under which the corporate tax rate would decline to 30.5 percent, with increases elsewhere to offset the lost revenue.

Cantor and RSC members said some ideas Democrats have been considering, such as extending unemployment insurance and boosting funding for food stamps, should not be included in a stimulus package. "We think it's more important, those of us on this dais today, to stimulate paychecks than stimulate welfare checks," said Rep. Jeb Hensarling, R-Texas, RSC chairman.

Cantor said he did not oppose sending out tax rebates to individuals, though he questioned their simulative affect.

In a report released Tuesday the non-partisan Congressional Budget Office said stimulus proposals aimed at low- and middle class Americans would be the most cost effective. "Lower-income households are more likely to be credit constrained and more likely to be among those with the highest propensity to spend," the report said.

Emerging Consensus?

Hoyer said that while it remains unclear whether the nation has already entered into a recession, all sides agree it is important to act to try to stimulate economic growth.

"The responsible thing to do is to act together to show we are stimulating the economy," he said. "I think that can be done in 30 days.''

Schumer said he expects provisions in the Democratic package to be nailed down before President Bush's Jan. 28 State of the Union address.

Hoyer and Schumer said that contentious ideas will have to be put aside if lawmakers hope to pass stimulus legislation quickly. "The Speaker and I both believe this needs to be simple,'' Hoyer said.

The GOP proposal includes bonus depreciation for investments made by businesses in 2008 and 2009, allowing a first-year write-off of 50 percent of the cost of new equipment purchased in that period. Republicans also want to increase to double the current $125,000 limit on the amount of spending on computers, machinery and other equipment that small businesses can deduct as expenses in the year the items are bought. Such purchases would be capped at $1 million.

Source: CQ Today

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