Looking for Short-Term Gain, Long-Term Pain

Posted January 18, 2008 at 6:31pm

It wouldn’t be Washington without partisanship. So despite all the Kumbayas between Republicans and Democrats over giving the economy a shot in the arm, it appears they still want a fight.

[IMGCAP(1)]Indeed, both parties seem to be sincere in their pursuit of a short-term, bipartisan economic stimulus whose prospects for enactment are promising. But they can’t seem to resist putting all those proposals that don’t pass bipartisan muster into longer-term economic growth plans, perhaps to be used as campaign bludgeons during election season.

Politically, it looks like Democrats and Republicans may try to have the best of both worlds. By passing a

short-term plan, both parties would prove their ability to “just get along.” Meanwhile, deadlocking on long-term economic solutions would make their case that the other party is the problem.

“Most of the long-term things are more controversial than the short-term things,” Senate Democratic Caucus Vice Chairman Charles Schumer (N.Y.) acknowledged Friday.

Indeed, Congressional Democrats and Republicans, along with President Bush, are coalescing around the notion of providing tax rebate checks as the central part of the short-term stimulus plan. And all sides have relayed a willingness to give in to some of their opponents’ demands. For example, Republicans have not ruled out agreeing to Democratic proposals to provide extended unemployment benefits and food stamps, while Democrats have made it clear that they’re open to GOP bids to provide tax relief for small businesses.

But Schumer explained that Democrats might want to do a second stimulus in part to make sure the short-term measure moves quickly to shore up the slowing economy.

So far, Democrats in both chambers say they want to have a second stimulus package that could give states more money for roads, public works and other infrastructure projects, as well as possibly address the housing market’s meltdown. On the other hand, Bush and Congressional Republicans want to permanently extend the president’s 2001 tax cuts in a second economic proposal. (Bush’s tax cuts expire in 2010.)

Lest anyone doubt the apparent political purposes of the second package, House Majority Whip James Clyburn (D-S.C.) indicated in an interview aired Sunday on C-SPAN that doing a second package could help Democrats gain the momentum needed to do well in largely conservative states such as his own.

“I think we’re going to have to do something on the back end of this [stimulus] that will show that we can sustain a movement,” Clyburn said. He added that if the two packages do not pass “between now and the elections in November, then I could see South Carolina coming back to the Democratic Party.”

Clyburn and House Financial Services Chairman Barney Frank (D-Mass.) noted that the second package likely would focus on public works and infrastructure, while Schumer said Congress also may attempt to shore up the housing market in a separate bill or bills. Still, the New Yorker also held out the hope of addressing some housing issues in the short-term measure, as has Frank.

Meanwhile, one senior Senate GOP aide said the fight over whether spending programs or tax policies are better economic stimulants was inevitable, even though Republicans feel pressure right now to forge consensus on a short-term measure.

“There will be an ideological fight over making tax relief permanent,” said the aide. “Democrats will be in a tougher position on the issue of tax permanency closer to November because their [presidential] nominee will be put in the position of saying, ‘Here’s where I want to raise taxes.’”

But the aide added, “Right now, all the pressures are converging to push both parties in relatively the same direction” on a short-term measure.

Of course, on the short-term stimulus, there’s still the tricky problem of who would get those tax rebates. While both parties have been careful not to draw any lines in the sand, they’ve both used code words to let the other side know where they stand.

Democrats have talked about giving rebates to “workers” — which basically means they want to send checks to people who pay payroll taxes, even if they don’t pay income taxes. Bush, in a Friday speech Democrats asked him not to make, was careful to say he wants to give “income tax relief,” a phrase that effectively means he doesn’t particularly like the payroll tax idea.

Indeed, Bush’s word choice made some Congressional Democrats nervous about the prospects for the short-term bill, aides said Friday. They are hoping Bush will be more conciliatory today when he meets with House and Senate leaders at the White House.

“There seems to be common ground between the principles the Congressional leadership has outlined and now the president has outlined,” Democratic Congressional Campaign Committee Chairman Chris Van Hollen (Md.) said Friday. “I’m optimistic, although as you know, when it comes to working things out between the Congress and White House, it ain’t over until it’s over.”

Because of that, Democrats are trying not to provoke the president. When asked if Democrats would accept a tax rebate proposal that only included income tax payers, Schumer said, “We don’t want to throw down any gauntlets at all with the president.” But he said that Democrats would push aggressively for such payroll tax rebates, along with an extension of unemployment benefits, a notion to which Bush also has been cool.

“We have no time to deal with ideological and partisan debates,” Schumer said.

Well, not in the short term, it seems.

Lauren W. Whittington and Jennifer Yachnin contributed to this report.