Political stimulus

Political stimulus

Washington Post: There are two ways to look at the package of tax and spending measures that emerged last week from Chairman Max Baucus’s Senate Finance Committee: as an economic stimulus plan for the country or as a political stimulus plan for the Democratic Party. As the latter, it was arguably superior to the bipartisan agreement hammered out between President Bush and House Speaker Nancy Pelosi, D-Calif. That plan was based on $100 billion worth of tax rebates to individuals and families, plus about half that much in investment tax breaks for business. Pelosi gave up increased unemployment benefits and food stamps and, in return, the White House agreed to focus more of the rebates on lower- and middle-income people. By contrast, the Senate Finance Committee plan would have shrunk the rebates slightly and spread them out among not only wage-earners but also about 20 million Social Security recipients and 250,000 disabled veterans. This made the package more expensive than the House plan — and put Republican senators, including several up for re-election this year, in the position of voting vote against the elderly and those who have served in uniform.

We write of this plan in the past tense, however, because Senate Minority Leader Mitch McConnell, R-Ky., and the White House seem to have held onto enough Republicans to deny it the 60 votes needed to move to an up-or-down vote. Still, considered on its economic merits, the Finance Committee bill is better than the Bush-Pelosi plan in one important respect: It would have extended unemployment insurance by an additional 13 weeks. This would put cash in the hands of likely spenders much more quickly than the rebates would.

More maneuvering

Democrats now say they will have to try to change the House bill on the Senate floor, starting when Sens. Barack Obama, D-Ill., and Hillary Clinton, D-N.Y., come back from the campaign trail after Super Tuesday. Though food stamps and extended unemployment benefits would enhance the impact of a final package, one amendment Democrats apparently want to push to a vote — an increase in home heating assistance — would not. But it does create a difficult vote for northern Republicans who face re-election.

As the Senate deliberated, the government announced that unemployment declined from 5.0 percent in December to 4.9 percent in January, even though the economy lost 17,000 jobs. The mixed report, following an earlier one that showed growth of about half a percentage point in gross domestic product in the final quarter of 2007, suggests that the economy is slowing but that, if a serious recession is coming, we’re not in it yet. That fact can also be looked at two ways: It could show that the case for a stimulus package is overblown. Or it could show that there is still time for Congress to enact a stimulus package while the measure can do some good.