Success on Stimulus Bill Left Some Bruises

Posted February 8, 2008 at 6:33pm

All the same ingredients were there — the vitriolic partisanship, the intraparty bickering, the tension between the House and Senate, the lobbyists and “special interests,” and the looming election. But despite it all, a Congress that was tied in knots last year somehow found a way to send tax rebate checks to 137 million Americans.

However, passage of an economic stimulus bill didn’t happen without potential consequences for both chambers and their leaders.

By the end of the whirlwind debate last week, questions still lingered about Senate Majority Leader Harry Reid’s (D-Nev.) approach after he seemingly shifted strategies several times in the runup to Senate consideration of the legislation, while Republican conservatives were left to examine the tire tracks they say were left on their back by the GOP leadership in the rush to make a deal.

With economic indicators showing a looming recession, Congress leaped into action early this year, vowing to put partisanship aside and give the economy a short-term shot in the arm by Feb. 15. And by all objective measures, they did just that — providing rebates to low- and middle- income tax filers along with a targeted package of small-business tax breaks in the space of just four weeks.

Right off the bat, however, there was controversy. First, Reid and Senate Minority Leader Mitch McConnell (R-Ky.) decided to cede their negotiating authority with the White House to Speaker Nancy Pelosi (D-Calif.) and House Minority Leader John Boehner (R-Ohio).

While Pelosi, Boehner and Treasury Secretary Henry Paulson were able to quickly come to an agreement, Senate Democrats were left wondering how they would ever be able to put their mark on it.

“From the beginning of this, [Reid] put Senate Democrats in a tough position, but we ended up getting past it because we had a good message on seniors and veterans,” said one senior Senate Democratic aide of the Senate’s main focus on providing rebate checks to low-income senior citizens and disabled veterans.

Another senior Senate Democratic aide said Senate Democrats made the mistake of muddying the waters, changing strategies and, overall, appearing that they did not know what they were doing.

“Republicans can rightly point to some level of bumbling,” the aide said. “Democrats created confusion when there didn’t need to be confusion, and people will remember that. … Sometimes how you do it matters as much as what you do in the end.”

Meanwhile, Senate Democrats said Pelosi undermined their efforts at every turn by leveling criticisms at the Senate package that it was too expensive and overreached.

Indeed, Reid and Senate Finance Chairman Max Baucus (D-Mont.) found themselves battling not just Republicans and the White House, but also Pelosi and House Democrats whose pride of authorship and commitment to their GOP counterparts to stick to the deal became paramount.

“I don’t think any change in the bill is really worth the delay,” Pelosi said hours before a key Senate vote on the Finance package. She added, “The Senate … is trying to expand the package. I don’t think there’s any disagreement on the values that we’d like to see presented. It’s just a decision about how much money you have to spend and is that stimulus.”

Statements like that, one senior Democratic Senate source said, helped shore up GOP opposition to the Finance package. “If she had just kept quiet, we could have gotten 60 votes. She gave the Republicans cover,” the source said.

Indeed, that’s exactly how the GOP read the situation as well.

The Senate Democrats’ attempts to paint their GOP counterparts as stingy “was really undercut by Pelosi and House Democrats,” said one House GOP leadership aide.

But one House source familiar with the backroom dealing defended the Speaker, saying Pelosi was “laser focused” on getting a deal and ran interference for the Senate with the White House, going so far as to convince the administration to hold off on issuing a veto threat against the Senate package.

And even though the bicameral process may not have been planned, it ended up working in favor of Democrats, because the House negotiators were not in a position to bargain for senior citizens and veterans, said one House Democratic leadership aide.

“If we would have fought for it over here, [the White House] would have said no and it would have tied the Senate’s hands,” the aide said.

Despite the perceived uphill fight for a separate Senate package, Reid allowed Baucus to try to forge a deal with Finance ranking member Chuck Grassley (R-Iowa), as the two had done so many times before with mixed success.

But the original package, which eliminated modest income caps included in the House bill, elicited a collective “gag reflex” by the entire Senate Democratic Conference, according to Reid himself. Baucus quickly fixed the problem by inserting income caps that were more generous than those in the House version, but the process was off to a rocky start.

Soon, the rallying cry of Democrats, including Baucus, would become the Senate bill’s provisions to provide rebate checks to low-income seniors and disabled veterans — language that was not included in the House measure.

However, the Senate bill included much, much more — expanded business tax breaks, renewable energy tax credits, an extension of unemployment insurance benefits, and to the horror of some in both parties, tax incentives for oil, natural gas and coal companies. That gave Republicans the opening to begin calling the Senate bill a “Christmas tree” loaded up with projects for special interests.

In what many thought was Reid’s acknowledgment that Baucus had gone too far, the Majority Leader on Jan. 31 laid out a Senate floor debate plan that appeared to assume certain defeat for the Finance package. The process Reid articulated instead favored an amendment that would simply add seniors and veterans to the House bill.

Remarkably, Senate Republicans, who previously had said they would accept no changes to the House plan, began to accept that seniors and veterans would have to be added.

Then Reid met with Baucus and Grassley, who told him they believed they could get the 60 votes needed to beat back a GOP-led filibuster of the Finance bill. Additionally, the largest senior citizen organization in the country, AARP, offered to rally its troops to the cause, as did a number of business groups that would benefit from the Finance measure.

The next week, Reid took to the Senate floor to announce that the chamber would get only one shot at adding seniors and veterans — through adoption of the Finance measure. Suddenly, the focus changed, with McConnell adopting Reid’s previous position of adding only seniors and veterans, while Democrats ratcheted up the political rhetoric in the hopes of finding nine Republicans to vote with them.

“If they think this is a bluff, wait until we have this vote and they’ll find out if it’s a bluff. I’m not much of a bluffer,” Reid said Tuesday before the vote.

But Republicans didn’t buy it, and only eight of them broke ranks with their leadership to vote with Democrats on Wednesday. It left Reid one vote shy of 60.

The next day, in a flurry of activity, Reid and McConnell came to the agreement Reid himself had hinted at the week before: They would add seniors and veterans to the House bill, along with a provision ensuring illegal immigrants would not receive rebates. And that’s what passed both chambers and was sent to the president.

“The fundamental error was in trying to push for more and trying to set up political votes,” said one senior Senate GOP aide. The aide added that Reid’s take-it-or-leave-it gambit on the Senate Finance package significantly undermined his credibility with Republicans.

“It probably solidifies in [Republicans’] minds that Senate Democrats aren’t able to force these things,” the aide said. “People know when he says things that he’s bluffing now. … There’s not a lot of credibility there.”

But Democrats say that had they not tried to expand the bill, 21.5 million seniors and 250,000 veterans would not be getting rebate checks.

“Sen. Reid makes no apologies for trying to provide stimulus for deserving Americans. It was his responsibility,” Reid spokesman Rodell Mollineau said.

Plus, Democrats said they otherwise would not have gotten 40 Senate Republicans on record as opposing the Senate Finance bill — a scenario that provided prime fodder for 30-second election-year ads against vulnerable GOP Senators.

Meanwhile, conservatives — many of whom made up the small minority in both chambers who voted against the final package — say they were left holding the bag again.

“There was nothing conservative or Republican about it except for the fact that it had President Bush’s name on it,” said one Senate GOP aide. “It was a complete abandonment of conservative free market principles.”

This aide also took McConnell to task for declining to fight for GOP amendments to the bill. “He basically sold out our ability to have any substantial changes that Republicans could be proud of,” the aide said.

But despite all the back-and-forth, the navel gazing and the perceived backstabbing, both parties said that in the end it was worth it.

“We got the administration to give tax breaks to people who don’t pay income taxes,” noted one House Democratic leadership aide. “Forcing the administration to get to that place was no easy task. … At the end, when people start getting the checks, no one is going to remember what vote was taken when.”