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It’s Still the Economy

Stimulus Presents Perils for Democrats

With unemployment headed to double digits, Democrats are facing a damned-if-they-do, damned-if-they-don’t dilemma when it comes to passing another stimulus package.

Democratic leaders are leery of angering a bailout-weary public with additional spending, but they also feel the need to take action lest they look uncaring or out of touch as the ranks of the jobless swell on the eve of an election year.

If Democrats enact another large stimulus — as some are now urging — they will feed into Republican charges that the first plan failed, just as they said it would. But if they don’t, Republicans will still say the first plan failed, and it will become harder as time goes on to keep blaming former President George W. Bush for a weak job market.

Democratic leaders and the White House are trying to thread the needle, opening the door to some more stimulus spending, while trying their best to avoid the word “stimulus.—

Speaker Nancy Pelosi (D-Calif.), House Majority Leader Steny Hoyer (D-Md.) and Obama spokesman Robert Gibbs have thrown cold water on the idea of a full-fledged second stimulus for now but have left open the idea of something smaller.

The White House and some Democratic leaders have been open to an extension of unemployment benefits including health care benefits, as well as an extension of an expensive tax credit for new homebuyers sought by the hard-hit real estate industry — all the while trying to convince reporters that such spending shouldn’t be called a “stimulus.—

But some leading Democrats are renewing a push for a broader package that would focus on building infrastructure and putting people back to work.

“I think it’s essential,— Democratic Caucus Chairman John Larson (Conn.) said. Larson said he brings up the need to focus on creating jobs at every Caucus meeting, and laments that the original $787 billion stimulus package went largely to stabilize state and local governments instead of building infrastructure.

Larson said that even with the focus on health care this fall, Democrats can’t lose sight of the need to create more jobs quickly, adding that’s what he hears at his local hot dog stand in Connecticut.

Health care “does not take effect until 2013,— he noted. “If you’re out of work, what you care most about is a job. … People who don’t have a job are impatient.—

Larson said President Barack Obama and the Democrats should get credit for confronting the crisis with the original stimulus package, but he said more needs to be done.

“The problem as they learned later on was more extensive than they thought,— he said. He endorsed Transportation and Infrastructure Chairman James Oberstar’s (D-Minn.) proposed $500 billion transportation bill as one way to jump-start jobs.

“What we really need to focus on is putting people back to work, and I think Oberstar’s got the right plan.—

Democrats have yet to figure out a way to pay for that bill and are trying to avoid raising gasoline or other taxes during a recession.

Exempting that bill from pay-as-you-go rules would surely anger some of the party’s fiscal conservatives, who are already fretting over record trillion-dollar deficits and a series of expensive bills.

“There is a serious case of bailout fatigue on Capitol Hill, and there are severe budget pressures,— a Senate Democratic leadership aide said.

House Rules Chairwoman Louise Slaughter (D-N.Y.) said she’s not sure whether the time is right to pass another stimulus package, given that so much has yet to be spent from the first one. Slaughter said the original package should have been larger and focused more on infrastructure.

“The first stimulus package would have been an awful lot better if we hadn’t had a futile attempt to get Republican votes,— Slaughter said.

However, Slaughter said she likes the idea of passing the Oberstar transportation package. That would put people to work, “building things we need anyway,— she said.

Rep. Chris Van Hollen (Md.), chairman of the Democratic Congressional Campaign Committee and Assistant to the Speaker, said leadership is watching the situation closely but believes the economy is already starting to turn around. “All the signs point to the economic recovery bill working as it was proposed,— he said.

He acknowledged that there have been discussions about passing the transportation bill or other items, but he said paying for them is another matter.

“The question on all of these things is how are they financed,— Van Hollen said.

Education and Labor Chairman George Miller (D-Calif.) said leadership hasn’t yet decided what to do.

“We’ve had a series of discussions about the jobs situation,— Miller said. “The Speaker’s had a number of conversations with us about the need to do something here.—

Republicans, meanwhile, aren’t waiting to pounce.

“Democrats promised the stimulus would create jobs immediately and keep unemployment below 8 percent,— said Michael Steel, spokesman for House Minority Leader John Boehner (R-Ohio). “With 3 million additional jobs lost and unemployment nearing 10 percent, why would they double down on a strategy that just isn’t working?—