As bipartisan House negotiators reported behind-the-scenes progress on the outline of a $145 billion stimulus package Wednesday, conservative Republicans pushed for a larger emphasis on corporate tax breaks while Democrats called for tens of billions in spending on unemployment insurance, food stamps and aid to strapped state governments.
With a massive pile of cash on the table, representatives of various interests were circling for their piece of the pie. That includes states, which are projected to face big deficits in the coming year without a federal infusion.
Democrats plan to help out states by temporarily boosting reimbursements under Medicaid. The shift was primarily an avenue for funneling cash to states and would not affect Medicaid eligibility, said Financial Services Chairman Barney Frank (D-Mass.).
Frank said the spending package would total in the tens of billions of dollars, although the details have yet to be worked out. He said that smaller amounts within the package would go to programs such as home heating assistance, financial counseling for homeowners and a summer jobs program. Frank also said that his housing reform package would be included, with provisions to avoid foreclosures.
“We’re not trying to get people to spend more money, we’re trying to get them to not spend less” as fears about the economy spread, Frank said.
Democrats also continue to push hard, despite GOP resistance, for expanding the centerpiece of the program — income tax rebates — to include lower-income workers who pay payroll and other taxes but do not make enough to pay income taxes.
Ways and Means Chairman Charlie Rangel (D-N.Y.) tied Democratic support for a White House-backed package of corporate tax breaks to Republican support for the tax rebates for lower-income Americans.
“Any ‘argument’ on this issue will be met with equally vigorous discussion of the inclusion of tax incentives for businesses that have been proven by economists to have a less-than-timely return on investment,” Rangel said. The payouts for people who don’t pay income taxes would help those “who are hurt the most during an economic downturn and whose contributions to employment taxes are so often forgotten.”
Members of the conservative Republican Study Committee, meanwhile, dismissed the centerpiece tax rebates for individuals as doing little but manipulating the gross domestic product for a month or two without doing anything to stimulate long-term growth.
The RSC proposed a permanent 40 percent cut in corporate tax rates along with more generous corporate tax rules — proposals certain to be dead on arrival with Democrats — and objected to plans to give tax rebates to people who are too poor to pay income taxes.
“In order to get a rebate, you got to get some bate in there first,” said Rep. Louie Gohmert (R-Texas).
Cutting corporate taxes permanently would do more to boost the economy than helping out individuals temporarily, the conservatives said.
“It’s equally important to put money in the hands of the wage payers than in the hands of the wage earner,” said Rep. Mike Pence (R-Ind.), who blamed the Democratic takeover of Congress for the downturn.
“One year into a liberal Democratic majority in Congress, surprise, surprise, the economy is struggling,” Pence said.
The conservatives’ sniping, however, appeared largely irrelevant, as they are not involved in the direct negotiations, and neither party wants to be seen standing in the way of a relief package for the economy in an election year.
Meanwhile, conservatives in both parties want the package to be offset, but there appears to be little likelihood that any such agreement would come together in the rush to send a bill to President Bush. Frank said the House would push for offsets, but he predicted that the Senate and the president would resist given that they opposed offsets for the alternative minimum tax relief. In any event, Frank said, any offsets, if they are included, would be delayed for two years to avoid defeating the purpose of the stimulus package.
House leaders, meanwhile, stayed relatively mum on the details.
Majority Leader Steny Hoyer (D-Md.) defended efforts by leaders to move the expected stimulus package swiftly through the House, circumventing the regular legislative process.
“We have got to do this in the short term in a timely fashion so that it will have the impact on the economy that is the whole purpose of the legislation,” Hoyer said. “Therefore, to go through the regular process and have hearings and have markups and subcommittee markups, obviously we would be to some degree … twiddling our thumbs while the economy burns.”
Hoyer also pointed to the participation of Rangel and Frank in negotiations to argue that the stimulus package is not being dictated by Treasury Secretary Henry Paulson and House leaders.
“So there is a much broader participation,” Hoyer said. “But Mr. Paulson is obviously concerned about what the president has to say. Mr. Boehner is concerned about what his Republican Conference has to say, and Speaker Pelosi is concerned with her chairmen and what her Caucus have to say.”
Hoyer reasserted that any economic assistance would not include long-range programs. “It is going to be temporary. Whatever we do is going to have a 12-month shelf life,” Hoyer said.
House Minority Leader John Boehner (R-Ohio) described the talks as “productive” following a Wednesday morning meeting. But he declined to offer details: “There’s really nothing agreed to until everything’s agreed to.”
Boehner praised the RSC proposal, calling it “an impetus for discussion in the coming weeks and months about our long-term economic future.”